1 February 2022
Response to
ASIC Consultation Paper 351
Superannuation forecasts:
Update to relief and guidance
We fundamentally agree with ASIC’s proposals, with some important points we believe need further discussion. Click here for access to our full submission.
The key reasons why ASIC are considering updates to guidance on superannuation calculators are (our emphasis):
ASIC currently provides relief for superannuation trustees (trustees) to facilitate the provision of superannuation calculators and retirement estimates (collectively, superannuation forecasts). Our relief for superannuation calculators may also be relied on by other entities that are not superannuation trustees.
Our working assumption is that superannuation forecasts are tools that can be used to help some superannuation fund members think about how superannuation can be part of their retirement income.
We propose to amend our relief to more closely align the requirements for superannuation calculators and retirement estimates. This includes giving trustees greater flexibility to set assumptions that reflect the types of products they offer, while requiring greater consistency in the assumptions they apply across their superannuation calculators and retirement estimates.
Our proposals are also designed to give greater clarity to trustees about how they can use superannuation calculators and retirement estimates as part of their strategies under the retirement income covenant reforms that are expected to come into effect on 1 July 2022.
We fundamentally agree with ASIC’s points. Clicking on the image to the right will give you access to our full submission.
Apart from technical matters on market forecasts, our main point of contention is with Section B3, where we do not agree with provision (e) that a statement needs to be made that the calculator is not intended to be relied on for the purposes of making a decision in the absence of advice.
One of the major problems in Australia’s financial advice industry is its excessive costs for many individuals. The provision of easily available calculators that can present the effects of different decisions made by the investor can reduce substantially the cost of helping an individual investor obtain a portfolio of assets that they are more comfortable will provide the retirement outcome that they wish, taking into account the risks that inevitably adhere to any decisions that are made.
We agree that there should be no promotion of a specific product, or a specific investment management process that entails fees being provided to the investment manager.
If the superannuation calculator is doing its job and properly showing the results of different possible decisions, then people such as SMSF trustees should not be told that the calculator is not intended to be relied on for the purposes of making the decision. This will dissuade some from taking decisions that may benefit them, or will persuade others to incur unnecessary by seeing an advisor who provides no better input.
