Superannuation Overview: Regulatory Scrutiny & Product Evolution
As Australia's financial services sector enters Q2 2025, regulatory pressure intensifies with ASIC's landmark report on superannuation death benefits capturing headlines. Meanwhile, product innovation accelerates with new retirement solutions from major providers, and legislative debates continue around super for housing. The industry faces mounting challenges with rising regulatory costs, increasing demands for transparency, and ongoing mergers reshaping the competitive landscape amid broader economic pressures.
Product Innovation & Market Movements
AMP has introduced new geared retirement options, expanding its product suite to address retiree income needs in the current economic environment. This development follows significant changes to market-linked pensions, which are now fully commutable, offering retirees greater flexibility in managing their retirement income streams.
In the superannuation space, Pearler Super is targeting first-home buyers with the launch of a new First Home Super Saver Scheme (FHSSS) product, positioning itself in the growing market for superannuation-based housing solutions. The move comes as the Opposition doubles down on its super for housing policy, indicating this will remain a contentious area of financial product development.
Major portfolio movements include AustralianSuper divesting its stake in WiseTech, while Aware Super has completed phase one of its Project Odin, a significant technology transformation initiative aimed at enhancing member services. Meanwhile, REST has awarded a US$300 million mandate to a Miami-headquartered investment manager, diversifying its international portfolio exposure.
The superannuation sector continues to consolidate with the official merger of Qantas Super and Australian Retirement Trust, further reducing the number of standalone corporate funds in the market.
Client Needs & Research
Research reveals a concerning knowledge gap among consumers, with insurance in super remaining a mystery to millions of Australians, highlighting the need for improved financial literacy initiatives. This lack of awareness contributes to challenges in claims processes and member engagement.
The retirement income gender gap continues to widen, according to new findings that show increasing disparities in comfortable retirement income between men and women. This research underscores the persistent structural challenges facing women's long-term financial security.
Financial advisers are navigating complex client needs in retirement planning, with industry experts identifying seven critical friction points in retirement advice that need addressing to improve client outcomes and adviser efficiency. These insights come as the financial planning sector continues to adapt to regulatory reforms and changing consumer expectations.
Regulatory Landscape
ASIC has delivered a scathing assessment of the superannuation industry's death benefit claims handling in a landmark report revealing significant deficiencies across the sector. The regulator found that not one trustee tracked end-to-end claims handling times, with some funds even charging fees to deceased members. Super trustees were accused of a disconnect on death benefit claims flaws, with Professional Planner describing the situation as a "see no evil" failure.
On the advice front, Treasurer Stephen Jones has clarified the scope of the new class of adviser and dismissed fears about DBFO collective charging, stating that "policy intent will not change" post-election.
The APRA levy is forecast to cost $243 million in FY26, though some analysis suggests this represents a forecast decrease for 2025-26. Meanwhile, the Treasury has opened a consultation on future regulatory frameworks, potentially signaling further changes for financial product providers.
Industry Movements
Fortitude Investment Partners has acquired a majority stake in Australia's leading SMSF audit firm, marking significant movement in the SMSF services sector. This acquisition reflects ongoing consolidation and private equity interest in specialised financial services segments.
In personnel movements, a superannuation governance veteran has joined Equity Trustees' boards, bringing valuable experience as governance standards continue to evolve. Meanwhile, the Federal Court has approved a $3.54 million settlement in the Caddick auditor class action, closing one chapter in this high-profile case.
The Financial Services Union has claimed victory over AMP regarding worker surveillance practices, highlighting changing workplace dynamics in financial institutions. Separately, AFCA has expanded its support policies for employees affected by domestic violence, reflecting broader social responsibility trends within the industry.
Key Takeaways
- Enhance focus on regulatory compliance and governance: With increased scrutiny from ASIC and APRA, funds must strengthen their governance frameworks and ensure full compliance with all regulations. This includes improving the handling of death benefit claims, as highlighted by ASIC's report, and adhering to fit-and-proper person requirements for board members.
- Address gender disparities in retirement outcomes: The widening retirement income gender gap and the lack of retirement confidence among women require targeted interventions. The industry should focus on providing financial education, developing appropriate products and services, and promoting diversity and inclusion.
- Improve member engagement and financial literacy: The research indicating a lack of understanding around insurance in superannuation underscores the need for better financial literacy initiatives. Funds should invest in clear communication and educational resources to improve member engagement and understanding of superannuation products and services.
- Embrace technological innovation: To meet evolving member needs and improve efficiency, the industry should embrace technological advancements. This includes investing in AI, enhancing data management practices, and developing digital platforms that provide personalised advice and improve the overall member experience.
Looking Ahead
The superannuation industry needs to consider the following future events and their potential impact:
- Federal Election 2025: The policies of different political parties regarding superannuation can significantly impact the industry. It is crucial to analyse these policies and understand potential implications for the sector.
- Global Economic Outlook: Economic factors such as interest rate trends, inflation, and geopolitical risks can influence investment returns and the overall financial landscape. The industry must stay vigilant and consider these factors in investment strategies and risk management.
