Produced by CoreData, this report explores the current state of Australian consumers with regarding financial literacy and management of financial affairs, along with present and future behaviours regarding different sources of financial assistance. Financial and The Conexus Institute. The aim was to facilitate the continuation of an important conversation:how to improve the retirement outcomes of Australians delivered by the superannuation industry.

Government services have a higher trust rating than financial advisers which might hold the key to bridging the advice gap according to research.

The changes proposed by the Quality of Advice Review (QAR) are aimed at providing funds with more clarity on what they can advise their members on but also increasing responsibility on trustees.

The working group will work alongside Treasury to evaluate the YFYS performance test.

A new review will address some of the unintended consequences of Your Future Your Super. But while super funds are no doubt holding out for a hero, there’s probably no perfect performance test.

Financial advice provided by a financial adviser will become a luxury good in the absence of adequate policy reform.

Fewer funds failed the Your Future Your Super (YFYS) test than last year – but plenty of passes have come from managing to the constraints of that test.

Funds have adapted to the test's metrics, but the consequent risk aversion could put the industry in "limp mode" and curb performance

The 2022 Retirement Conference showcased an industry that is stepping forward and developing better retirement strategies for members. Run in an open-forum style, attendees from the 14 largest super funds were joined by representatives from Treasury, APRA, ASIC, government and opposition representatives, six industry partners and some recognised thought leaders on retirement

The 2022 edition of the Retirement Conference was a collaboration between Conexus Financial and The Conexus Institute. The aim was to facilitate the continuation of an important conversation:how to improve the retirement outcomes of Australians delivered by the superannuation industry.

The principles-based approach of the Retirement Income Covenant gives funds the flexibility to focus on the best outcomes for individual members, but challenges remain in measuring success and providing tailored advice according to experts.

With the Retirement Income Covenant coming into effect on July 1, superannuation funds have focused on applying a principles-based framework and strategic approach to providing retirement solutions for their members, rather than just looking after accumulation

A big chunk of super funds are now in “limp mode” as their buffer against the performance test evaporates. And sustainable investing is getting harder when even tobacco exclusions eat up the tracking error budget.

Investment returns of super funds are expected to be hit as appetite to take on performance test risk is diminished due to the Your Future, Your Super performance test according to the latest research.

This article explores the technical challenge of navigating the 3-D investment framework.

A sizeable portion of the super industry is in “limp mode” and close to failing the prudential regulator’s annual performance test, which money managers fear is leading to less active risk-taking and lower investment returns.

While the Your Future, Your Super (YFYS) performance test was the most controversial aspect of the reform package, the stapling measure designed to prevent the unintended creation of multiple accounts wasn’t far behind.

Minister for financial services Stephen Jones has made a sensible decision in requesting Treasury reviews some of the Your Future, Your Super (YFYS) reforms, particularly the performance test.

The Productivity Commission (2016-2019) identified default fund allocation had a “lottery” effect, which could result in significant differences in outcomes between like individuals.

The Quality of Advice Review will be difficult for panel members due to the morass of law and regulation, and the operating models that have developed as a result.

In February this year it became law that all workers will be covered by the Superannuation Guarantee (SG) regardless of their monthly pay. This replaces the $450 monthly threshold. Ever since that announcement I’ve worried that many low-income earners will experience a reduction in take-home pay. Fortunately that is unlikely to be the case. Overall, this provides a good opportunity for self-reflection.

Young people play an important role in co-creating solutions to Australia's superannuation and retirement challenges – but engaging them remains an ongoing challenge.

APRA’s direction is becoming clear: it is collecting data, using this data to produce insightful research, and putting this back to industry to challenge trustees.

Vertical integration has been left out of the Quality of Advice Review terms of reference, leaving in limbo the application and appropriateness of vertical business models in the industry.

Every Australian deserves access to a baseline level of quality retirement guidance.

Submission advocates for a more principles-based framework, and proposes two new requirements: a review of investment management model, and a review of member inequities.

In 20 years, the super fund industry has failed to implement common standards to compare outcomes. That is going to take industry leadership to change.

The Review of the quality of financial advice needs to undertake more than a binary debate on the merits of vertical integration.

Submission advocates for a nuanced review of vertical integration and the need for a scalable retirement guidance delivery mechanism.

Liquidity management for super funds needs to go beyond solvency and also consider member inequities, loss of portfolio shape in a crisis, and the cost of restoring liquidity and portfolio shape.

Retirement specialists need to be patient and positive as the gaps between the possible and present states of retirement expand.

UNSW’s Sandbox Program is designed to introduce students to industry projects.

A standardised web-based tool can make financial advice affordable and inform retirees about the retirement income products needed to make their superannuation savings last a lifetime.

Pamela Hanrahan and David Bell collaborate to propose a standardised tool for retirement transition support that would be made safe by design, rather than safe by regulation.

A new paper released by The Conexus Institute and co-authored by one of Hayne’s royal commission advisers proposes the introduction of a low-cost, standardised modelling tool that provides access to retirement planning but sits outside the current regulatory parameters.

Overviews the pathway forward for super funds under the YFYS performance test including constraints and opportunities.

Submission supportive of Retirement Income Covenant while identifying some of the important next-steps for retirement income policy.

This paper explores the future of the investment management industry under the Your Future, Your Super (YFYS) reforms.

This paper explores how super funds will move forward under the Your Future, Your Super (YFYS) reforms.

It is easy to bemoan the loss of portfolio flexibility created by the poorly designed Your Future, Your Super (YFYS) performance test. But, viewed through a positive lens, there is now a fascinating challenge to integrate the impact of YFYS into a fund’s updated investment model.

The Conexus Institute and CFA Societies Australia have collaborated on a research project exploring the challenges associated with portfolios allocating to illiquid assets.

The challenge of managing portfolios which allocate to illiquid assets remains ongoing. It is far from a set-and-forget problem.

Submission with constructive suggestions for improving the Retirement Income Covenant and some additional reflections on retirement income policy.

Developing retirement solutions is the next big challenge facing the superannuation industry. The Position Paper for the Retirement Income Covenant (RIC) is open for consultation, with the RIC on track to take effect from 1 July 2022.

Developing retirement solutions is the next big challenge facing the superannuation industry. And it is about to get serious...

Geoff Warren and David Bell collaborate to explain the likely choice architecture for retirees and within this consider how to ensure that all retirees find their way to suitable retirement solutions.

All indications are that the Government’s retirement policy, including the Retirement Income Covenant scheduled to take effect from 1 July 2022, will be principles-based, promote choice and competition, and emphasise member engagement as the key to success.

The Retirement Income Covenant (RIC) remains scheduled for 1 July 2022. Minister Jane Hume and Treasurer Josh Frydenberg have both promised a principles-based approach to retirement strategy and encouraged funds to step forward.

This document provides the reviews and reflections from the 2021 Retirement Conference co-hosted by Conexus Financial, Investment Magazine and The Conexus Institute on June 21, 2021.

The Your Future, Your Super (YFYS) reforms have been passed. There has been passion, research, controversy and lobbying aplenty. Overall we think consumers will benefit. The degree of benefit will depend on what happens next. The next steps taken by policymakers, regulators and fund trustees will weigh heavily on consumer outcomes, and ultimately determine the success of YFYS.

There is so much written about investment behavioural biases, but there probably needs to be more written about behavioural biases relating to policy assessment. I’m sure I’ve fallen victim to these biases many times.

One-in-four people have more than one super account. These people pay at least two lots of administration fees and potentially have distorted insurance arrangements. Multiple account arrangements generally occur when employees switch employers. A policy is required only because industry has failed to develop a solution.

The announced changes to the YFYS performance test are positive for consumers. The inclusion of admin fees transforms the performance test into a consumer outcome test, while including additional unlisted asset indices means the test won’t overly constrain funds from constructing portfolios in members’ best interests.

ASFA has cast doubt around claims made in the Retirement Income Review (RIR) that many people are not spending down their retirement savings, being too frugal and preserving large account balances which are ultimately bequeathed. Here I present some basic modelling which further endorses the findings of the RIR while emphasising the need for better retirement solutions.

Soon every super fund will have to provide a retirement solution to their members which sits alongside their existing account-based pension offerings. The impact on the financial advice sector will be significant.

I don’t always agree with Liberal Senator Andrew Bragg, but his observation during this week’s Senate hearing that forcing representative bodies to merge would be a good way to reduce costs to super funds and members was a good one.

The Your Future, Your Super (YFYS) reforms are designed to improve outcomes for superannuants, which is nearly all of us. The reform package is undoubtedly well-intended. Therefore it is critical that it achieves its intended purpose. This has been our focus when we have reviewed one of the most important reform measures, an investment performance test.

Opening statement by David Bell to the Senate Economics Legislation Committee.

At first glance Your Future, Your Super appears very strange policy design from a conservative coalition government, which leads me to ponder whether reform of the award super process itself is the longer game at play.

There is a school of thought that adding a couple of extra indices to the Your Future, Your Super (YFYS) performance test will fix the bulk of its shortcomings. Sadly, this is incorrect.

“Follow the science” is a phrase commonly used to encourage evidence-based decision-making. Frequently associated with topics such as climate change and the COVID-19 pandemic, it is just as applicable to superannuation.

‘Rough justice’ is a term being used by some in support of the Your Future, Your Super performance test. In a nutshell the line of thinking seems to run as follows: if the status quo is viewed as poor (in this case, an expensive industry with lots of agency issues), the policy intent is good (protect consumers from underperforming funds) and the expected outcome appears reasonable (industry consolidation via the removal of underperforming funds), then the policy justifies a few funds inadvertently being treated unfairly. In this context ‘rough justice’ sounds reasonable and readily fits the populist, slogan-driven environment in which we find ourselves. But this isn’t the standard we want to set.

The Conexus Institute has celebrated its first anniversary and expanded its advisory board to include Dr Deborah Ralston and Associate Professor Geoff Warren.

For all the talk about the severity of the Your Future, Your Super (YFYS) performance test, it could have been set much tougher. In some areas the industry has been given a free ride. This adds to the catalogue of issues attached to the controversial policy measure.

In October last year Marisa Hall painted a compelling challenge to asset managers of all types: adopt system-level thinking to create a more sustainable world. She painted a pathway for how this could be achieved, with culture and measurement key enablers. However, I found myself pondering the role of government policy as enabler or inhibitor.

A student project to improve the richness of information in retirement estimates provided under ASIC’s class order relief inadvertently highlighted the many challenges faced by industry, policymakers, and regulators as they seek to make quality guidance accessible to the broad population. The trade-off between tailoring information to be more relevant for people pulls against the desire for such information to be accessible at low cost.

In an environment where fund visibility will be more important than ever, superannuation schemes will need to think deeply about how they promote themselves and their brands to potential new and existing members.

This year’s Budget included the Your Future, Your Super (YFYS) reform package, which will have a significant impact on superannuation. One reform, a performance test, has proven highly controversial. A performance test sounds like good policy to protect consumers, so why is it proving so controversial?

The Review didn’t just explore this issue: it was probably the most significant finding: households not spending down their capital in retirement is one of the greatest sources of inefficiency in Australia’s retirement system.

A group of asset consultants and researchers have asked Treasury and policy makers to consider the possibility that “zombie funds” could be created as one by-product of the government’s new performance test. Further, the group has said that future consolidation among superannuation funds could be stalled if the performance test is implemented as planned in 2021 in its current form.