The superannuation sector of the financial services industry is important, not only to the many individuals who participate in it as members of superannuation funds, but also to the nation. Superannuation is important to individuals because it will affect, even determine, how they live after retiring from work. It is important to the nation because of the size of the superannuation savings pool, and how that pool is invested. And it is also important to the nation because the greater the capacity for individuals to support themselves from their superannuation savings in retirement, the smaller will be the total claims on public welfare outlays of all kinds, such as aged pensions, housing and health.
At March 2018, superannuation savings comprised assets worth about $2.6 trillion: more than 140% of Australia’s nominal gross domestic product in the four quarters to March 2018.[1]
At June 2017, more than 14.8 million Australians had a superannuation account.[2] About 40% held more than one account.[3] Superannuation represents about half of household financial assets.[4]
Regulated superannuation funds are organised as trusts. The trustee holds assets for the benefit of members or, on the death of a member, for dependants or beneficiaries of that member.
There are three types of superannuation trust: self‑managed superannuation trusts (regulated by the ATO), exempt public sector superannuation schemes (regulated by Commonwealth, state or territory legislation) and APRA-regulated funds regulated by the Australian Prudential Regulation Authority (APRA) under the Superannuation Industry (Supervision) Act 1993 (Cth) (the SIS Act).
To understand the issues that have been considered by the Commission, it is necessary to trace the main legislative and other steps that have been taken to arrive at the regulatory regime that has applied at relevant times.
[1] Background Paper No 22, 6, Box 1.
[2] Background Paper No 22, 8 [3.1].
[3] Background Paper No 22, 8 [3.1].
[4] Background Paper No 22, 4–5.