‘We stood on the shoulders of giants’: Finishing super’s unfinished business (and revitalising it along the way)
“A super fund CEO told me that the nicest thing about the retirement income covenant (RIC) is that there was no more waiting,” says Amara Haqqani, chief client strategy officer at Bennelong and a former retirement income policy manager at Challenger, who will be speaking at this week’s JANA conference. “Everyone was in a holding pattern because there’d been so much policy conversation in the last seven or eight years, because they weren’t sure what the government was going to do.”
“What it enabled them to do was breathe and say “Okay, I get to do what I want”. That was by design… the other alternative in policy land seemed to be the Comprehensive Income Product for Retirement. That was a disaster as a policy because it tried to wrap up all these concepts into one product, and it tried to be a legislative default. You can’t legislate for product.”
The RIC pared everything back, Haqqani says. Other than the overarching objective of thinking about retirement through the lens of the member, it wasn’t prescriptive. The significant variation in membership composition between funds means that what works for one fund won’t necessarily work for another. The funds that are perhaps doing retirement best have a “natural bent” to it – those borne out of government or defined-benefit arrangements, with higher balance members who have access to advice.
“I’m not going to sit here and say ‘super funds should do xyz’, because it’s entirely idiosyncratic based on what super fund we’re talking about,” Haqqani says. “The joy that I’ve had being behind the scenes on this stuff is that the conversation I’ve had with super fund A is completely different to the conversation I’ve had with super fund B once I’ve gotten an idea of who their members are.”
“You have to understand what all your member types are, because they’re not homogenous. Once you understand your member types, then go and figure out what they all need… Retirement is a combination of data, advice, and any product solutions that fall out of them. That’s no different to me in my day job at a fund manager. The next product that I put out is going to be client-led, and it should be no different for a super fund where the next thing they do should be member led.”
But as super begins to finish its great unfinished business, superannuation policy – and so, retirement policy – is still publicly-driven by its (literal) old guard. At last week’s CMSF, Cbus chair Wayne Swan posed the question of how to reinvigorate the super model, and settled on the answer that a new generation of CIOs, CEOs, and trustees will have to be found and mentored. That’s not to suggest the old guard have nothing to add; just that there’s room for new faces in an industry intrinsically linked to the financial wellbeing of all Australians.
“I’ve seen so many people with amazing policy ideas for how this industry can be better and how it can move forward, and a lot of those people don’t get the light of day for whatever reason,” Haqqani says. “They don’t have enough grey hair, they don’t work at the right places, they don’t have the right media policy around them.
“It’s not about what comes before us; it’s about what happens next, and how you uncover those voices. I was really lucky that I met Jeremy Cooper in the hallway at Challenger and he took me under his wing, but the amount of people after that who looked me up and down and said “Where did you come from?” because I didn’t come from the traditional policy circles.”
The next generation of big thinkers in superannuation will have to argue some of its toughest debates. There’s no guarantee that the aged pension will still be around when younger people reach retirement age, and the entire policy environment is still predicated on home ownership – the only reason Haqqani herself bought a house. The people who got the RIC over the line were mostly younger people passionate about retirement and its objectives, Haqqani says, and super’s unfinished business presents a “great opportunity to give voice to those people.”
“We stood on the shoulders of giants, but the baton got passed in the last five metres to the young people, notwithstanding the 20-year journey that came before us on retirement.”