Jo Cumbo is an Australian living in England who makes no bones about where her heart is!
Been living abroad for two decades but the first glimpse of home soil after a very long flight gets me every time. 🇦🇺🇬🇧 pic.twitter.com/C2XivrjG6C
— Josephine Cumbo (@JosephineCumbo) February 11, 2023
For a fortnight, Jo has been sending us “twitter from Australia” – like Alastair Cook t us letters from America. And I have been loving the actuality of Jo’s reporting.
The Super War is dividing opinion in Australia. On the one side are those who see the huge Australian Super funds being used as a piggy bank by an Australian Government which would rather fund public projects with money from pensions than from general taxation.
Critics argue that investing in unquoted securities risks false valuations that could leave investors out of pocket if calls came on a fund (think Woodford)
In Australia, the regulator is focussed on how the nation’s #superannuation funds are valuing unlisted assets, bought to generate returns for retirement savers.https://t.co/S4jvWcA7vL
— Josephine Cumbo (@JosephineCumbo) February 16, 2023
On the other are those who see the investment of Super in the future of Australia as the future both for Australia and Super.
Australia’s plan to channel its vast pool of #pension savings towards “nation-building” investments “need not come at the expense of returns” says Treasurer. https://t.co/73cLXJ8SLJ #superannuation #asfaconference #investing #retirement
— Josephine Cumbo (@JosephineCumbo) February 22, 2023
So far so familiar
The UK pension industry is having a mini-war of its own over this with some trustees arguing they are being asked to compromise their fiduciary duty. But in Australia, this argument is being played out on the front pages of national papers – everyone knows about Super-Wars.
It’s tempting to see Super-wars coming to the UK in time but must remember that in Australia, the state pension is effectively Super, few Australians want to be in a position where they have to claim a means tested state benefit. In the UK , it is the workplace pension that tops up the State Pension and for most people the State Pension is at the heart of their retirement expectation.
Which is why there is not the pressure from unions, employers and most of all from Government to negotiate the rates of contribution going into Super today. Indeed , the Government’s reluctance not to implement the AE reforms, promised for some time about now, suggests that it is more interested in maintaining the Triple Lock than replicating Super. Which is why I don’t think we’ll have the national awareness of how pensions are invested that is apparent in Australia – at least anytime soon.
A duty to the consumer to re-unite them with their pots.
A good section of Jo’s reporting has been on the interventions of the Australian Government to sort out their lost pot problem
Super funds are legally required to transfer inactive low-balance accounts ($<.$6000) to the Australian Taxation Office. The ATO will try reunite the account with its owner, or where possible, proactively consolidate the super on the member’s behalf.
— Josephine Cumbo (@JosephineCumbo) February 22, 2023
Again the problem is familiar though the numbers are considerably smaller than in the UK
And the reason why Australia has less in loss pots is pretty clear. The Government gets on with reuniting people with their money and actively assists people to have one rather than a number of pots.
Here I think the parallels with the UK are exact. So far, the UK has told pension providers to sort their mess out and has been restrained from mandating consolidation by arguments about “member detriment”. The Australian system of proactive consolidation has no such scruples. People either do the work as they want it done or it is done for them.
Aboriginal rights to an early pension
One of Jo’s most interesting tweets concerns a class action from a group of Australians who have lower life expectancy than any other – the Aboriginals.
In Australia an Aboriginal man is taking legal action to access his #pension early due to a shorter life expectancy. This is a landmark case which could have global reverberations. https://t.co/cXVc5QgVgf
— Josephine Cumbo (@JosephineCumbo) February 22, 2023
Jo is right to take this seriously. There are calls in the UK for the state pension age to be flexible to enable those who have impaired life expectancy to receive their pension early. As we move towards greater sel-determination, how long will it be before Ros Almann’s calls for the state pension to be underwritten are heard? Certain readers of this blog, including one of the Baroness’ fellow peers, will reading this with a mixture of interest and alarm.
Paying pension some attention
Enthusiasts for our Government’s campaign to improve the profile of UK pensions through Big Zu, will look on enviously at the resources available to Super’s to promote and educate staff.
Will UK workplace pensions press to provide financial advice to their members?
ART, a superannuation fund, is opening a new member centre in central Brisbane. This demonstrates the visibility and presence of super funds Down Under. There is a push for these funds to be able to give advice to members. pic.twitter.com/4gRSYtQt6g
— Josephine Cumbo (@JosephineCumbo) February 24, 2023
The Fundamental things apply…
Back in the UK after a great week in Brisbane talking all things #superannuation. Issues in Australia & beyond include Govt funding strains for state and private #pensions and the challenging investment environment for #pension funds. pic.twitter.com/DY9Z2G10Wz
— Josephine Cumbo (@JosephineCumbo) February 26, 2023
So long as we have an ageing population and an increased dependency on the young to pay pensions to those in later years, the funding strains on pensions will trouble Governments from Brisbane to Westminster.
Australia – for many good reasons – is a great comparator to the UK. Of all the initiates that the Australian pension system is embracing, I find this the most exciting and the one I would most like to see replicated in the UK
NEW: The Australian government has announced proposals to enshrine the purpose of #superannuation in law. “Preserve savings and deliver a retirement income” are at the core of the proposed objective unveiled in a consultation launched today. #pensions pic.twitter.com/MBDacgZaxI
— Josephine Cumbo (@JosephineCumbo) February 20, 2023
Welcome back Jo – Britain needs you – even if your heart is where your home is!