Minister Chris Bowen: ASFA Day 3

Day Three of ASFA in Melbourne ended on a self-congratulatory note, with Minister Chris Bowen concurring with earlier speakers that we do in fact have a great national savings system, and delegates rating the conference a success.

In closing the 2009 ASFA conference, Chris Bowen, Minister for Financial Services, Superannuation and Corporate Law, outlined his four tests for the outcome of the various reviews that are to affect the national savings system: simplicity, efficiency, equity and adequacy.

A system that is easier to understand will help ensure Australians are more engaged with their super says Bowen. Great technology will reduce costs and improve returns, with the Medicare clearing house described as a “modest first step towards a more efficient, less paper-based system”.
The Cooper review will look at reducing fees and increasing long term returns, said Bowen, citing Treasury figures that estimate a one per cent difference in fees can translate to 16 per cent less at retirement in a members’ account.
Side stepping whether or not nine per cent is adequate, the Minster linked adequacy (the minimum objective) and equity, suggesting that the greatest challenge is to design a system with genuine incentives for low and middle income earners, signalling greater concessions for this group.

“The global financial crisis has put super through the wringer. It’s battered returns and shaken the confidence of those who are about to retire or have already retired.”
Against that backdrop, Bowen says his job “is partly to explain to Australians the importance of super” for individuals and to the economy generally.
Bowen addressed audience questions focused on adequacy, the Henry Review and some particularly pointed questions about legislative changes to super.
“Adequacy isn’t enough”
“Henry Review recommendations won’t be implemented immediately – most will be the subject of a national discussion.”
In addressing continual government changes to super, Bowen suggested “the reviews are an opportunity to have more certainty in super”, but only once the various recommendations from current processes are implemented. In other words, more change now against the promise of longer term stability.
I attended ASFA on behalf of BlueChip Communication. Bruce Madden will also be attending next week’s FPA Conference in Melbourne.