Welcome to that super show, the podcast. We talk about all things super from the inside. I'm Neil Benson, founder of Novagentic.

And I'm Sarah Penn, CEO of Mayflower Consulting. Each week we unpack what's changing in the industry, what funds are wrestling with and how tech and regulation are shaping the landscape.

Sometimes we bring in expert guests, but mostly it's just us having a real conversation about how super is working and what could make it even better.

Let's get into it.

G', day, Sarah. It's good to see you. A couple of weeks break, I've been away, I've been relaxing. How have you been? What have you been up to?

Me too. I've had a lovely time. I've had a great Christmas. I've eaten too much and, and had some time off and now it's nearly the very, very end of 2025.Can you believe it?

I know, it's. What a year it's been. Let's reflect back for a moment on the highlights for the year for superannuation.What do you think have been some of the key moments for you as we, as we walked through 2025?

I have to say, on the legislation front, despite the carry on about Div 296 and despite my earlier thoughts that there was no way it was going to get passed, not in its current format, it did get amended to not include unrealised capital gains. Thank the good Lord above. So I would say the over 3mil, which is now the 3.4mil thing, Div 296 is actually a win because that's how it should be.You shouldn't be able to use super as some kind of tax break for the ultra wealthy. And we got listo at the other end, which is great, which is what A has paid for B.And also the SG is now 12%, so we're still not quite at the 14% that Keating and co promised in the 1990s, but 12% is a pretty big whack, to be honest, and I'm very happy we're there. How about you?

I don't think we're going to go any higher. I can't see any of the major political parties having any appetite to push employment costs any higher than 12%. But we'll see. You never know.The highlight for me and the highlight, I think for a lot of people, certainly in this audience, has been the launch of that Suit super show. Many of them are stoked it's come into their lives, it's improved their professional outlook. They feel so much better informed.I think, understandably, the mailroom has been full of praise and feedback. So thank you very much everybody for following the show, giving us your likes, your ratings and reviews.We are Australia's most highly rated superannuation podcast. Can you believe that?

I know, it's very exciting. And yes, we'll enjoy the rating along with all the boxes of chocolates and bottles of whiskies we've received. Very big on whisky myself.Hint, hint, nudge, nudge.

Everything's on the gift register, folks. We're keeping it above board.

We don't have to because we're not licensed.

Highlight. Real highlight for me has been the passing of the Payday super legislation which will come into effect next year.And I think it really closes the gap for an awful lot of people who don't pay a lot of attention to their super until it's too late and they find out that employer that's just gone bust hasn't paid anything into their current for the last three years. So great to see that.And even for people who do receive quarterly contributions, receiving them every two weeks or every month will mean extra contributions. That money will be in their account for longer and invested for longer. And that will add a couple of grand to their retirement as well.

It will more than just a couple of grand. Someone did do their numbers. What do they come with, 30, 40, 50 grand or something?

Yeah, 300 and something dollars a year. It was going to be thousands of dollars in overall compounded over your working career. So that's awesome.

Compounding being the eighth wonder of the world. So I'm told. How about on the not so good side?

Yeah, not so good side. I think the Shield Master Trust and the First Guardian Palava will drag on into next year. The regulators are bringing cases.Asak Anapa are bringing cases against a number of the players involved in that. I don't think we've seen the end of that list yet. I think there's going to be more people dragged into it.

As well they should. Yeah, from me, sorry.

There's been some potentially what it looks like very fraudulent activity and then a whole bunch of just people turning a blind eye and being negligent. I think. And I'd love to see those poor folks who've lost a lot of money in their retirement, compensated and set right again.

Yes, me too. I think these aren't super funds that have gone bust. They are managed investment schemes.But at the end of the day, it is people's retirement savings that have gone up in smoke and that is just not good enough. We just cannot have that happening.And I think actually the fact that there are so many players involved who are going to be busted just shows you how many points along the chain where there could have been a different outcome and they weren't in any of those places. And here we are. Bollocks. No good. Zero stars. Do not recommend.

Great way to sum it up. Thank you.Also, on the not so good side of the ledger, we've seen continued problems with death benefits and insurance claims and processing those, we've seen some fines laid out as well. I think a number of funds are racing to improve those systems and processes and improve that experience.I also think that treasury is going to step in.I think they've announced that they're consulting on some standards, so the industry is not going to be able to police itself and is going to be forced by the regulator to meet certain external standards as well in the future.

I think it's a classic case of you lot didn't do it, so we're going to do it for you, and then if you don't like the result, you should have done it yourself in the first place. Yes, I feel quite strongly about it.And the thing that I've found interesting is because it's been discussed at many a conference, I feel like it's one of those things where we should be looking to other industries and external experts as to how to improve the processing. And there's a whole lot. There's a whole thing around it called queuing theory, which is a whole.It's a combination of maths and psychology that I think isn't being considered as part of it. I think there's a lot of throwing money and people at the problem which isn't actually solving it.I don't think it's beefing it up now, but when there's even more people in those queues, I don't think it's going to particularly help versus because the answer will just be throwing more people at it. And we already know that we have shortages in lots of skilled areas. So I think some of this needs to be looked at differently in order to get.Get the result that we want.And my call out would be, if you are a super executive, is to look outside the industry or other places where this stuff is already just bread and butter of what already happens. We were talking about, even in the, like, 1980s, Toyota and the Kaizen method and all the rest of it.This idea of how to manage these things properly has been around for a Very long time. I don't think it's something we should be looking internally to solve.

No.I've worked quite a lot on introducing complaints management and claims management apps into the industry and just didn't see an awful lot of complaints take up a lot of shrugging of shoulders. Yeah, it's not really a problem.Yeah, we just, we hired an extra 80 people for six months and we got through the backlog and it's not business as usual.Your business as usual still requires an awful lot of forms to be filled in manually and you still take on average 10 to 12 months to assess a complex claim. 10% Of your members have a nomination in place. Yeah, we've got a long way to go.

Yes. Anyway, it's all upside or as I like to say, opportunities everywhere, Neil. That's right, everywhere.

Great way to think about it. Speaking of things we're not so sure about, the Assistant treasurer, Daniel Molino has stepped up his rhetoric.I actually hosted a roundtable a couple of weeks ago regarding the compensation scheme of last resort, which as far as I'm aware was really an obligation put on financial advisors to contribute to a fund in case any financial advisor provided bad advice and couldn't afford to compensate their client.That scheme partly because of SHIELD and First Guardian, but just the compensation is blown way out of the money that's in the pot and the government's now looking to all financial services organizations to chip in. What do you think about that?

Prima facie? I do think it's a good idea.I think it's very short sighted, I guess, to think that financial advisors are the only people who are contributing when these things go wrong.And also your average financial advisor is a suburban small business with a couple of people in it, so sending them an extra bill for 30, 40, 50, 60, whatever grand a year. At the same time they're all shouting about how expensive financial advice is and we don't have enough financial advisors. Just doesn't.Doesn't seem like the best way to fix it and also doesn't impact bad actors because they often work outside the licensing regime and probably just don't pay those bills anyway. So then yes, prima facie, it makes sense that super funds platforms, manage investment schemes, should also be part of the compensation scheme.What do you think then?

Just becomes a general levy on the entire financial services industry and there's plenty of those kinds of levies already. If it's just another one, why do we have a separate one?Yeah, it's reduces the productivity your government's at the same time banging on about productivity. Funding these kinds of things is not very productive and just increases the cost doing business for everybody.And there's also a bit of a moral hazard, then if I can be risky because everybody's insured. Right. So it actually increases systemic risk across the industry if we all think that bad behavior is insured. So, yeah, that's a tough one.ASFA has come out and said, no, we've already got special compensation schemes and whatever, we should be excluded. I'm not so sure. Banks also argue the same thing, that they've got levies imposed on them and they should be excluded as well.Somebody's got to pay for the compensation. I think.

Yes. I was trying to think before other industries that have a similar sort of ability to create absolute havoc if something goes wrong.I guess food and medicine are too.However, the companies, especially on the medical side, if a drug has a particularly bad, unknown side effect or something, those drug companies are very well, very well funded. But I guess is it be the same as making hospitals or making all the GPS put extra money in?Having said that, the insurance fees and licensing fees to be a doctor, even a gp are high. I don't know. I couldn't think of any other industries where we could look to, to see how it works in other places and whether there's opportunity.I guess motor safety maybe is another one.

Yeah. I don't know whether it sprang to mind was a property industry.If you happen to put cladding on your building that is flammable and everybody needs to get rid of that flammable cladding in a hurry and you're on your own. There's no compensation scheme there. It's just tough. Whoever owns the building has to pay for bringing up to standards. Yeah.So different industries handle it in different ways.

Yes, and I think it is one where it's worth looking at other industries rather than just continuing to whack industry participants in this industry with ever bigger and bigger levies. And also there's the issue that I believe the compensation scheme, the administration fees which are paid to.Is it ASIC, they're paid to already amount to some $12 million or something and hardly any. Barely a cent's been paid out. So what's all that money for anyway? There's a whole lot of questions about it.It's clearly not quite optimal yet, shall we say, and I don't think it's fair that financial advisors should be just footing the bill for the whole lot. That just seems a bit. There's a Hell of a lot of other people in this industry making money. Why are we only whacking one small proportion of it?

All right, so Mr. Molino and your roundtable, good luck. Seems like work cut out for you. Try and placate Sarah by the end of the year.

You have two days. Crack on.

Crack on. Speaking of cracking on, my friends at Hester have had some licensing conditions imposed on them.I don't know if you recall Sarah, but earlier this year they switched administrators and announced I think in April.So they give their members about three months notice, maybe four months notice, that there would be seven weeks of downtime switching systems and processes and everything else from mug over to grow. I think part of the problem was those seven weeks were spread across three calendar months.So on the face of it it looked like it was a three month shutdown. And when the systems came back up, I remember that week very well. There were several processes and some data that wasn't quite where it should be.And I think some of, some of the systems were a bit getting up to speed, shall we say and the member experience wasn't quite what they wanted on day one. It's a big project, Massive big bang, big risk cutover. Was it too big of a bang?

Yes.

Okay.

I think it's, it's interesting because to me this is sort of in the same category as death benefits and insurance claims. That idea that you can lift and shift the entire machine to turn everything off and then turn everything back on again.I don't know why that decision was made, but it may well have been because the cost of doing things gradually would have been higher costs or. I'm not sure why, how they made that decision.But it probably came down to money in that they were trying not to spend members money inadvertently by making it take longer. So they were trying to minimise it and minimise cost in that, that three, three point triangle you can have time, money or scope. Yes, the.Their fixed one. They chose to try and probably reduce money. They couldn't change the scope because they were moving everything.So you made it a long time in the cold hard light of day and hindsight being a beautiful thing and all that, perhaps it would have been better to do it in stages somehow.Whether you move you, because we probably have some defined benefit stuff hanging around somewhere, you move DB stuff first or then you move insurance claims handling or you move, you move it in sections rather than doing the whole lot in one go, which is probably what was happening under the hood, I'm sure. But it just didn't leave them any wiggle room. And then the older pub test or front page test, it just did not pass.Was way, way, way too long to be out of market. People can put up with days, they can't put up with months.

So I think there's a dreadful irony here is at the same time APRA are encouraging funds to innovate, to improve their technology, to improve their productivity.And when a fund like Hester goes and executes on that request, unless it goes perfectly, APRA is going to be the same people who come and whack you on the head for it not going perfectly. The administration technology that we have in the market is old. It was never designed for payday super or really for decommuniation at all.

No.

And if you're going to be an administrator who outsources on behalf of several funds, you have to run the same process across as many funds as possible so that you don't have very fund specific processes or system customizations. And that just leaves us in a tough spot. And I've heard rumors on the street that NUFG may not acquire growth.

Yes.

I've tried to figure out what the source of these rumors is. I haven't got to the bottom of that yet.

That would seem the ultimate irony, wouldn't it?

Yeah, has to be right before they.

Started if that were to be the case.

But at the same time, maybe MUFG is looking across their portfolio and saying, look, we're going to have to invest tens of millions of dollars here. Grow's got a great modern platform that's a better way to modernize their technology. And read the builder on. Maybe that's what they're thinking.

Yes, if I was mufg, that's exactly what I'd be thinking. What can we acquire? Surely there's gotta be something we can buy rather than build our own thing.Yeah, because the, when you try and replace those massive backend systems, it's like your average core banking system can take years and years to upgrade and then half the time it doesn't work and then you've only got 10 year shelf life. So maybe three years of cutover and then a few good years and then we're back to trying to figure out what we're gonna do next.It's not a, it's not a great setup and it's certainly not financially exciting. The thing with Hester really for me is it's an absolute mother of an afgo.An AFGO being another fabulous growth opportunity, otherwise known as a stuff up of or something going wrong with enormous proportions. The thing for me with an AFGO is what can you learn from it?You can't turn the clock back, you can't change what you've done but if everyone across the industry can learn from it and think about what that means for large scale transitions and we all end up in a better place as a result then in that means that I guess it's a silver lining to a bit of a cloud.

Yep.

Having said all of that they didn't actually lose anyone's money. No, I know the wheels are still back on.

We were talking to Jen my warehouseuper and their transformation of their a registry system was a three year program. I imagine there was lots of pain points along the way there as well.

Yeah, absolutely.

There's a number of funds coming together to form a work super over time and I imagine some of those members didn't have access to all their data for short periods as well.These things are big and they're hard and there's lots of money and there's lots of transactions and there's lots of history involved and it all has to come across seamlessly.

Yeah, yeah.

It's very hard to get perfect.

Yes, yes it is. It's lucky it's not me there. That's all I can say.

On a slightly brighter note I read a really interesting article I think it was Ash and Alex Novigi about governing AI systems from a superfund trustees perspective.So chatter and I like to give people lots of ideas for how to apply AI and superannuation but this is from the perspective of governing it which is vitally important. The article is called Governing the invisible. There is a AI management systems standard from ISO called ISO42001.I think I never really thought of super funds applying that standard. I thought it was something that Microsoft and OpenAI and some of the AI vendors would do but their point of view as well.We need to make sure that the model is behaving consistently because it's not an algorithm that's been programmed. This thing is using statistics and probability. The same retirement calculation could offer two different results.We want to minimize that so we need some governance in place. So that was an interesting way to think about it as well.

Yes and that's where I think it is one of those things where you can learn from other industries. Right. ISO already have standards for other things. They're the experts in standards.So rather than everyone trying to come up with their own internal things, if we all work towards using that standard Then we know that there's a pretty high baseline, really.And that should go a long way to protecting everybody in the industry and making sure that we use AI in a way that manages the risks and helps build the upside. Because there is significant upside to AI.

Oh, my gosh.

Yep.

Yeah.

So it's amazing some of the stuff it can do.

I think it's going to find APRA introduces some kind of regulation around the use and option of AI and financial services. I just hope that they point to something like ISO 42001 and say if you comply with that standard, that's good enough for us.Or at least align their expectations along with an international standard like that so that we can look around and see who else is applying that and learn from and use some of that knowledge to meet that standard within the Australian financial services sector. That'd be good.

I couldn't agree. I could not agree more.I think there are too many times when we try and look inwardly to do these things rather than looking at who else has already done it.At the end of the day, when it comes to stuff like AI, super is just a very large, very complicated industry with lots of moving parts and lots of different players and lots of different legislations and legs and rigs, as I say.But there are many other industries globally that also have all those things and the idea that we should only talk to each other to sort out a solution is just silly.

That's one of the great things about going to conferences and hearing about what's going on in other industries and what the kind of best practices are and the proven practices are from other industries. Speaking of which, I've got a little surprise for you. I've started a new that super show shorts channel on YouTube.I don't know if you have time to check it out yet. I'm trying to do a little daily.

Video are hip right now.

It's got some news for superannuation professionals. So we've got that super show, the main channel on YouTube where you'll find this audio podcast and a New Delhi shorts channel as well.So there's a separate channel for those shorts.So if you see me dancing around and lip syncing on YouTube, it's a little experiment that I'm running to see what we can do to improve our level of knowledge and provoke some thought in 2026 and beyond.

Yes, and have a bit of play with TikTok over the holidays. It is quite entertaining.

Sadly, only if you're 16 or older, Sarah.

Yes, yes. But you and I last time I checked even with your Benjamin Button age going backwards on the on the health scale are definitely not 16.Well over it in fact.

Good stuff, Sarah. I think it's been a fantastic year. I've really enjoyed this podcast season with you. Let's pick it up in January and keep it going.It's been a lot of fun.

Yeah, I completely agree. We'll see you next year. Oh my God. Happy New Year everyone.

Bye for now. Thanks for listening to that super show. We hope today's episode give you something useful to take back to your team.

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