In recent days, there has been a proposal tabled that would overhaul how superannuation funds will work in Australia. This is something of a delicate matter from a finance industry perspective, with so many people reliant on these funds as a way of ensuring an income after retirement. However, industry regulation is of course important to consumers too, so the proposal merits discussion.
What Is Being Proposed?
The new proposal states that any superannuation fund should have an independent chairman or woman, and that at least a third of trustees should be independent. While it is clear why this is something that may be raised in the public interest, it would require an overhaul of how the superannuation industry works in Australia, and has therefore caused a strong reaction from many people in the industry, including financial services minister Kelly O’Dwyer.
Kelly O’Dwyer’s Response to the Proposals for Changes to Superannuation Laws
Kelly O’Dwyer’s response as financial services minister has been that the new proposals are overly ideological and not sound for the industry. She stated that these changes wouldn’t protect members but create issues in the industry.
“The package of reforms that the government is bringing forward applies equally across the sector to all funds, whether they’re retail, industry or corporate funds.
“This is important because we force people to put money aside from their wages to provide for their retirement income, and people need to know that money is protected.”
These were Ms O’Dwyer’s responses to the proposals. Other analysts believe that this reaction is a sensible one, and the proposals won’t benefit members of superannuation funds, though some still think that the changes would make funds better managed and safer as investments.
Ideology and Finance
The discussion in this case is not so much about whether the proposals represent a nicer situation than the way the industry currently works, but about whether making changes to the systems that govern how Australian pension funds work need to change. People like Kelly O’Dwyer whose role is to understand the effects of changes on both the industry and consumers are understandably very interested in what the potential effects of these changes would be, and whether they would actually lead to benefits for citizens who want to engage with the funds or not.
The opinion of the industry so far seems to be that this change to legislation will not achieve the results it is intended to and will actually be a worse situation for consumers as well as businesses working in the industry.
Are There Other Options for Investors?
While people who want to prepare for their retirement tend to choose superannuation funds, if this is something you don’t currently like the management of, there are other ways of saving that can yield well, or you can start investing in things like stocks and shares as an individual rather than choosing a pension fund. You can also look into things like ‘what is CFD trading?’, and try to make some money to take with you into retirement from that kind of investment instead.
There really is no fool proof way to guarantee your financial stability in later life, other than being really rich, so any choice you can make is gambling on the industry working as it should. Most of us accept superannuation funds as a decent gamble. However how you feel about how they are managed, it is perhaps something you may want to consider in light of these proposed changes.
If you work in the industry, however, these potential legislative changes may well cause a lot of upset to how things are done and change the products that could be developed and sold to customers. Whether you think the ideology behind the suggestion makes sense or not, it is sure to be a period of upheaval. We don’t yet know whether these changes will be implemented or whether those in opposition to them like Kelly O’Dwyer will win the day. However, it is an interesting case to watch for anyone who is concerned with their own funds, or who works in the sector and is worried about changes.
“Murray LeClair is a freelance finance writer specialising in stocks and shares, forex and ISAs. After studying business at Lancaster University in the UK, Murray worked at a number of financial institutions in London and New York and is now following his passion for writing.”