Australia’s biggest super funds are on an overseas hiring blitz in a bid to reduce expensive external management fees and get in on lucrative private equity and infrastructure deals earlier, as the $3.5 trillion sector outgrows local markets. Quotes Geoff Warren on scale effects.

APRA and ASIC’s joint thematic review into how super funds have gone about implementing the Retirement Income Covenant (RIC) reveals insights into the challenge faced by the entire superannuation ecosystem, including industry, regulators and policymakers.

Size is “not an automatic win” for superannuation funds and comes with significant disadvantages and challenges, according to Geoff Warren, director of research at The Conexus Institute, challenging prevailing wisdom that greater scale necessarily delivers better outcomes for members.

Retirement plans provided by financial advisers should be superior to those provided at scale by super funds. The comprehensiveness of the advice service provided by planners means they can account for the personal circumstances and needs of their clients and provide a more holistic solution.

Super funds are required to develop retirement income strategies that deliver income over a retirement that may span decades. Waiting to see what happens is not going to work as an assessment technique. So how might you establish if a solution is any good?

Explores approaches to quantitative assessment of retirement income strategies, based off research paper by David Bell and Geoff Warren.

This paper explores how quantitative assessment may be undertaken, supported by illustrative examples, to enhance the design and assessment of retirement income strategies.

As Australian superannuation funds evolve and get bigger they face a question of whether to copy the organisational structures of their bigger, more sophisticated Canadian counterparts, or find their own way that more adequately befits some of their unique features and better serves members. Amanda White looks at the Australian superannuation market evolution and what it can learn from Canada.

Underpinning consolidation in the super industry is the idea that larger scale is beneficial for superannuation fund members. But that’s not necessarily true. A bigger fund is no guarantee of better returns, writes Geoff Warren.

Explores the impact of the Government’s review of the Your Future, Your Super performance test

Explores the impact of changes to the Your Future, Your Super performance test on dedicated socially responsible investment options.

Big and small funds alike can do well for their members, and what's more important than size is how they use it. But the risks of having a highly concentrated industry have been "underplayed", according to Geoff Warren.

Is it time to abandon ‘the size is good’ mantra that is helping drive a wave of merger activity among super funds in Australia?

Across the super industry there exists large dispersion amongst funds along the three dimensions of size, age and gender. This creates challenges for the superannuation ecosystem.

While Commonwealth Superannuation Corporation (CSC) is Australia’s largest pension fund, platforms have the largest proportion of their members in retirement. This creates an interesting dynamic around who will be the leader in the retirement segment.

The prudential regulator wants to lift the governance standards of superannuation funds to insist on more timely revaluations of unlisted assets to protect new members from buying in at artificially high prices.

Combining size and inflow rates creates a much richer picture of the super fund landscape (for APRA regulated super funds). We are able to divide the universe into four quadrants based on these two dimensions. Some funds are in a strong position and the future is bright. For others there is uncertainty and work ahead.

When APRA releases its fund-level superannuation statistics for APRA-regulated funds the race is on to analyse assets under management. This measure translates directly to scale and is the measure that garners most attention. However net inflow is just as, if not more, important. It informs future scale as well as the ability to invest in illiquid assets.

Student groups at UNSW recently took on important challenges faced by the superannuation industry. In projects designed and led by MetLife, Aware Super and The Conexus Institute, students were exposed to current challenges in the areas of engagement and default fund design.

Do you view a super fund as a product provider or as a benevolent fiduciary? That was the question asked of Minister Stephen Jones at the recent Conexus Financial Political Series lunch.

The Your Future, Your Super (YFYS) performance test is a classic case of a problem which has flaws, is easy to critique but hard to fix. It is a tough situation for policymakers, highlighting the challenges of effective policy design in complex systems.

The Your Future, Your Super (YFYS) performance test is a classic case of a problem which has flaws, is easy to critique but hard to fix. It is a tough situation for policymakers, highlighting the challenges of effective policy design in complex systems.

Minister for financial services Stephen Jones didn’t mince his words in setting out his key challenge to the super fund sector: deliver an excellent member experience. This built on similar sentiment he expressed at this year’s Retirement Conference.

APRA’s annual release of fund-level superannuation statistics provides a good opportunity to reflect on the state of Australia’s superannuation industry. There are some fascinating trends, some of which seem set to persist.

We’ve just released new research recommending the next essential step for development of a healthy retirement system following on from the introduction of the Retirement Income Covenant (RIC) and the first round of retirement income strategies (RIS).

The superannuation industry is grappling with the complexity of delivering retirement solutions. Perhaps the only way to assess how well they work in the future is to start assessing them right now.

Collaborative research with FTSE Russell, An LSEG Business, ASFI and RIAA explores the performance test tracking error created by different ESG and sustainability activities.

Super funds’ activities in ESG, sustainability and carbon transition result in relatively high levels of tracking error under the Your Future, Your Super performance test, increasing the risk of funds failing the test.

New research confirms the “anecdotal concerns” of the superannuation industry that the current design of the Your Future Your Super test makes responsible investing a no-go zone.

The Retirement Income Covenant (RIC) represents a significant milestone in the development of a high quality retirement income system for Australians. As super funds develop their Retirement Income Strategies (RIS), the next essential next step is to assess the quality of the RIS they are delivering to create accountability, and provide a framework for ongoing improvement.

Collaborative research with Associate Professor Geoff Warren (ANU) outlines how retirement income strategies can be assessed.

Research paper exploring a sustainable level of YFYS performance test tracking error and the opportunity cost of the constraints.

The Conexus Institute has just released new research exploring how much the Your Future, Your Super (YFYS) performance test will constrain investment strategy resulting in an opportunity cost to consumers of $3.1 billion per annum.

Financial Services Minister and Assistant Treasurer Stephen Jones announced a review of the Your Future, Your Super (YFYS) reforms earlier this year, including the performance test, applied to MySuper default options, which is arguably its most contentious element. The deadline for submissions closes on October 14.

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.