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Member data the ‘missing piece’ of the retirement puzzle, funds say
Industry voices have underscored that greater access to government data will enable super funds to gain a “holistic” understanding of their members.
In response to Treasury’s discussion paper Retirement Phase of Superannuation released in December, industry fund HESTA has raised a key structural issue in that funds cannot best deliver retirement income products and services without developing a federal government data sharing framework.
“Our members want – and indeed turn to – HESTA to take into account their super, the age pension, and any other assets,” the fund wrote.
“For funds to better meet the Retirement Income Covenant (RIC) objectives, funds need more efficient access to government data. This would help deliver a better understanding of member savings and spending profiles, enabling funds to better develop products, investment strategies, and member communications and tools.”
HESTA pointed to the added benefit of delivering a more “seamless” process for members, saving them both time and stress.
Moreover, the industry fund referenced a joint thematic review conducted by the Australian Prudential Regulation Authority (APRA) and the Australian Securities and Investments Commission (ASIC) last year, which explored the implementation of the RIC by select registrable superannuation entity (RSE) licensees.
In examining the progress of 15 RSE licensees, the review found that all RSE licensees were missing data that was “critical” for the development of an effective retirement income strategy.
As such, HESTA recommended that the government fund government agencies to establish a data sharing framework, suggesting that it be a “single access point” of data from various agencies such as APRA, ASIC, the Australian Taxation Office (ATO), and the Department of Social Services.
“Such a data sharing framework using a single point of access would provide a single and efficient query point, rather than funds seeking data from multiple sources,” HESTA said.
Meanwhile, AustralianSuper agreed that adequate data is the “missing piece of the puzzle” to providing guidance to members to ensure they are equipped to achieve their best financial position in retirement.
In its submission to Treasury, AustralianSuper said that this would be a turning point for super funds in developing a “holistic” understanding of members.
The fund wrote: “If funds were equipped with an understanding of a member’s assets, income, debts, marital status and dependants during the transition to retirement period, the product or strategy recommended could be more aligned with their objectives, situation and needs. This information is critical to ensuring members can be nudged to the best solution as they make planning decisions for retirement.”
“Members want tailored information that reflects their financial situation and gives them the autonomy to make their own choices for their own needs.”
AustralianSuper consequently recommended that members be empowered to give their super funds secure access to their relevant data held by the government, adding that members being able to identify themselves through a “government accredited digital identity” would help deliver improved outcomes.
Importantly, super trustees currently have no way of passively knowing whether a member, for example, has a partner, if they own their home, and if they are eligible for the age pension.
Similarly, the Association of Superannuation Funds of Australia (ASFA) said that the preparation and publication by the government of relatively recent data on retiree spending patterns, incomes, and asset holdings would assist funds in meeting their obligations under the RIC.
Noting that Treasury’s discussion paper suggests mechanisms such as the Consumer Data Right could be used to access information from a member’s bank account, ASFA said this would still require member consent, would be labour-intensive, and would not take into account the asset holdings and transactions of other household members.
“A more productive approach to enabling funds to access relevant information would be for regulatory changes to allow access to Centrelink data on receipt of age pension and the rate at which it is received,” the industry body suggested.
These increased provisions, ASFA said, should also include access to ATO data on total superannuation balances and whether contributions on behalf of the member have ceased and if the member is in receipt of a defined benefit pension from a fund.
AUTHOR
Jessica Penny
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