ASFA CEO Delahunty on Australian Pension Funds

It’s a really timely point to be having this conversation, given the sudden kind of global focus on the Australian model. No system is without its flaws. But is this the most sort of perfectly imperfect pension system in your view? It is something to be incredibly proud of. I think the nation has built something over only about 32 years that is the envy of the world for really good reason. It starts with some central principles that are to be, I think, much sort of hugged by Australians and and held on to those principles being universality. So the coverage of the system is wide and preservation, the money is held until retirement. And it’s those two sort of central elements of our system that you can find are missing in others that haven’t quite managed to get to where we’ve gotten to. What are global peers asking you about the Australian system? There’s a lot of conversations at the moment, especially as you mentioned, from both the UK and US colleagues that ask us about how we’ve gotten to a defined contribution system that is not only increasing individuals prosperity as they reach the end of their working life, but also increasing the nation’s economic prosperity overall and taking, albeit slowly but certainly a burden of the government public pension. So they ask us about the setup of that. They ask us about how Australians feel about that. They ask us about the politics and the ideologies and about who are the Champions of this system. And in reply we talk about some of the challenges that it still has because it’s good to say other nations being able to build a really robust system that they can you know leapfrog some of the things that we’ve had to work through. And and and we talk about how though it is, it is really well loved in Australia. I think and I think people are whilst we often talk about disengaged with superannuation, I think increasingly people know it’s there, they know what it’s there for and they expect us all to do our jobs in protecting it and helping it grow. But the system itself needs to needs to shape a little bit to a modern working life as well And and those are some of the smaller challenges that we have in front of us even though we have this really well celebrated and world class system. Yeah Mary, you mentioned some of the challenges that that you’ve had to the Australian superannuation system has had to sort of jump over. Can you elaborate more on those and also as you said reflecting more of that modern modern day of working or modern life. Well in the in the central components of the system I talked about preservation and talked about universality. One of the other things that we really need to focus on is equity as a as a sort of a central tenet of the system equity can be delivered. So equal outcomes for people if if the superannuation system and retirement income system better reflects their working life. So when it was designed, we had workforce participation that was primarily based on that sort of typical male model where a a person’s remains sort of attached to their employer for the duration of their working life and then they stop work and then they start retirement. And I think if you look around society now, that that’s really not reflective of the way most people interact with their workplaces and their even their sort of vocations, their way they work. Especially true when you think about the people who overwhelmingly take time out of the workforce to add economically to the country in an unpaid capacity. So we might be looking after elders, might be raising other children. And in that sense that’s overwhelmingly done by women. And so that’s naturally going to have worse outcomes when it comes to retirement. And in a nation such as ours, where we are prosperous and we are lucky and we have built a great system, we don’t want the face of poverty in retirement to be a woman who’s dedicated some of her life in an unpaid capacity to the rest of us. So that’s something to work on. And then we’ve got this sort of concept of retirement, which we’re really turning ourselves to now. And and Mary, I guess perhaps then not everyone has enough money to confidently retire on. But given the pool that people actually do take out or extract at the end, is there enough education, I guess that’s being done so people know how to spend their money wisely and and really try and make it last for the longer term. We can always do better with helping people make the most of the settings that they’ve got in retirement and that comes to whether or not we can people can access advice or help in such a way that is meaningful to them that is cost effective. But there are a range of sort of outcomes in retirement and superannuation wasn’t ever meant to completely replace the government age pension and it is it is to to supplement where it’s still needed. And so we’ve we’ve have to sort of you know is offered a little bit in terms of that it it it is it is definitely helping people’s dignity as they finish their working life. We can do better at talking with them about what it is they want to do in their post working life and how they might want to spend their money and how to make that last longer, but also what role the Government age Pension has in that as well.