Hello!

I’m Peter Edmiston and I’ve been working in the super industry for a few years, I think about 40 at last count!! And now, I have reached my career high with a guest appearance on Hans’ blog! I’ll be here for a couple of blogs to give my two cents worth on the industry and what I’ve witnessed.

It has been suggested that we have tinkered with the system a lot over time yet we still don’t have it right. Can I just say that I have been working in superannuation for over 40 years and each change has felt like a fundamental change to the system as opposed to ‘tinkering’. I think what has also happened, and maybe the cause of the ‘tinkering’ comments, is the increasing pace of change.

Some of the fundamental shifts that have happened in my time include:

• Bundled life policies: Insurance and investments were once provided by the one “House” unlike the unbundled approach of today.
• The move towards universal coverage: Early on, superannuation was for the privileged few; those who worked in Government, banks and very big companies. Even then it was restricted to white collar staff. Women had to work longer than men before being invited to join the fund and eligibility for the employers’ contributions was based on years of service. This meant you may have had to work with the company for 30 years before becoming eligible to all the employer contributions. If you left after, say, 4 years you would not receive any employer contributions. So through Awards, and then through the Superannuation Guarantee Charge, coverage extended to this wider group. And all employer contributions vested in the member straight away.
• Industry funds were born: This meant one fund for thousands of employers rather than thousands of funds, one for each employer. Also, if you stayed in the same industry you just kept in the same superannuation fund (or that was the theory at least!).
• Defined Benefit Funds: Some of these rare and endangered funds still exist! However, mostly our industry has moved to defined contribution funds – where the investment risk moved from the employer to the member.
• Removal of the nexus between employment and superannuation: At one stage, you had to be employed (or self employed by gainful personal exertion) to have superannuation. The thin edge of the wedge was the introduction of Spouse Accounts, then came splitting under Family Law, Contribution splitting, Child accounts and Better Super (see next point).
• Better Super: This was a total change to remove some of the basic complications in the way superannuation was set up including removing the tax structure on lump sum payments and setting maximum contributions that receive favourable tax treatment.
• Governance: A truck load of regulatory, governance and compliance requirements ASIC, ATO, APRA (once the ISC…another change! ) the SCT, Auditors to audit the auditors etc etc.
• Member Choice of superannuation fund: A chance to keep one superannuation account all your life (just like your bank account). Well again, that’s the theory at least – there are still many loopholes here and, as an industry, we’ve seen that this isn’t quite what happens in practice.

Now that you’ve got my view of the history of super in a nutshell, you should share your version…have we been tinkering or not?

Next week, I’ll run through some points on improving the system…

Signing off for now,

Peter