RICE WARNER CANBERRA SUMMIT 2017 A century of Superannuation will your fund still be here? Event Summary Thank you for attending the Rice Warner 2017 Summit our 10 th Superannuation Summit in Canberra. To paraphrase Juan Antonio Samaranch, we think it was our best ever. We are very appreciative of you making the effort to join us and contributing to the success of the afternoon / evening. Like everything to do with superannuation, there is a lot to pack into a limited amount of time. Yesterday was no different. To recap, the key themes that emerged across all of the sessions at the Summit seemed to revolve around: Trust Engagement Innovation Speaker 1 In setting the foundation for a potential 80 year membership, Michael Rice spoke about how funds would need to embrace some fundamental building blocks. In hindsight, these might become known as the three Rs of superannuation : Retention Relevance Returns Other key points from Michael s presentation included: The requirement for products to provide longevity and liquidity. A continued focus on governance and that the industry will need to evolve to retain and maintain relevance. That advice will be a key driver of member engagement, including in areas beyond the current remit of superannuation funds. Michael posed several challenges to the industry in relation to: Harness and leverage its scale to be able to provide an all-inclusive fee of around 45 bps within 10 years. Focus on global best practice, particularly in relation to investments. Providing insurance benefits that focus on the needs of members. Click here for Michael s presentation.
Panel 1 Our first panel of Sally Loane (FSC), Matt Linden (ISA) and Martin Fahy (ASFA) was facilitated by Steve Freeborn. This panel considered what would be the requirements for a successful industry. Key takeouts from this session included: That trust (of members and in the system) would need to be integral components. Engagement (of members) would be essential. Innovation would be a key aspect of engagement particularly for the younger generation! The panel discussed the objective of the superannuation system and its core purpose being to provide a retirement solution (as a replacement / supplement to the age pension). It also introduced some new thinking about the phases of economic activities. While most of us were familiar with primary, secondary and tertiary activities, Martin Fahy introduced us to quaternary and quinary sectors. These have evolved out of the tertiary sector, where quaternary industries are defined as knowledge based services and quinary industries relate to the highest levels of decision making in a sector or economy. Separately, these are defined as: Quaternary - skills for complex processing of technology (information and environmental), including education and professional services. Quinary - Domestic services (once done by people in their home). Potential opportunities for the Australian superannuation system relate to how we innovate, particularly in relation to development of products that satisfy the dual objectives of investment returns and social impact. While there was some commentary about the position of the various participants in the industry, it was abundantly clear that trust was an essential ingredient for success and that for consumers to trust the industry it needed political certainty and a united voice from the various industry participants. Speaker 2 Robbie Campo discussed the issues and some of the headwinds that women are faced with in saving for retirement. From a demographic perspective, she noted that over half of the population is female, so it is an important issue to all. With women retiring with only half the balance of men, and receiving only around one-third of the tax concessions, she stated that changes must be made and made soon. Robbie highlighted that the super system delivers very different outcomes for females and males. While there are reasons why females retire with less than males, the majority of women sit in lower deciles. Robbie implored attendees to reflect on the current superannuation system that leaves women economically worse off and to use their position of influence to provide specific solutions for women. Click here for Robbie s presentation. Speaker 3 The Minister for Industry, Innovation & Science, Senator Arthur Sinodinos, provided an insight to the political landscape and the way in which superannuation was thought of in Canberra. In particular, the Senator reminded us that as an industry we should be focused on the higher end: change is a constant 353639_1.docx Page 2
the structure of the economy is changing the industry needed to be overt about how it was investing. He encouraged us to think about leveraging industry innovation and science to position the superannuation industry as a smart / advanced manufacturing centre. Panel 2 Our second panel of Nicolette Rubinzstein (Unisuper) and David Knox (Mercer) was facilitated by Matt Willis (Vanguard) and was asked to share their perspectives on what funds should do to ensure the industry was able to achieve sustained success. Key take-outs from this session included: better engaging with members developing a better narrative around superannuation in general. Reinforcing the comments from earlier in the session, David Knox identified three essential elements for success: Trust, built on positive member engagement and a more compelling narrative around superannuation in general. Objectives of superannuation as being more than just a substitute for the age pension Pooling of resources to ensure the scale of the industry can be harnessed to deliver efficient benefits to members The panel identified the correlation between the funds under management and fees charged to members. In particular, it identified that as assets had grown, a greater range of member services was now being provided, curtailing potential fee reductions that might otherwise emanate. It was seen as important that the development of services should be focussed on outcomes and needs. In terms of looking ahead to a century of superannuation, it was the panel s view that the next decade should be about getting the basics, or foundations, right. In thinking about what to do, funds should also consider what they do not want to do. Dinner address We were privileged to have Vanguard launch its inaugural How Australia Saves research over dinner. Paul Murphy enlightened us with a comparison of the characteristics of the Australian and US pension systems and the savings behaviour of the constituents within each. Overall, while the Australian superannuant has a head start as a result of the compulsory regime that exists here, the US system with more incentives available, provides a better support for those members that engage in / with the system. Click here for Paul s presentation, and here for the full research report. 353639_1.docx Page 3
353639_1.docx Page 4
353639_1.docx Page 5
353639_1.docx Page 6
353639_1.docx Page 7
353639_1.docx Page 8