Jozef Imrich, name worthy of Kafka, has his finger on the pulse of any irony of interest and shares his findings to keep you in-the-know with the savviest trend setters and infomaniacs.
''I want to stay as close to the edge as I can without going over. Out on the edge you see all kinds of things you can't see from the center.''
-Kurt Vonnegut
New research shows there are four types of retiree – care-free, content, cautious and concerned. But for the happiest, mindset is more important than money
Four years into his retirement, 73-year-old former engineer Ranbir Bedi can’t believe his luck.
So much has changed for him and his wife Rani, 69, in those years, but it’s all been for the better.
“I wasn’t expecting this much – we’re carefree,” Bedi says. “We go for a walk every morning, and we go for a walk in the afternoon. We go overseas almost every year.”
The couple sold the family home in the Sydney suburb of Kingsgrove last year to move to a beachside apartment in Ramsgate closer to their daughters and three grandchildren.
The Bedis live on their superannuation and annuity nest egg of about $750,000. They feel financially secure., which is down to careful planning – Ranbir and Rani have regular meetings with their financial adviser Gerard Haskew of Leading Advice.
But they also have a positive mindset, reinforced by regular dancing, karaoke and a lifetime of giving back to the community.
The Bedis are prime examples of the “carefree” category of retiree identified in a survey by Challenger and Susan Bell Research, which conducts market research focused on older Australians. They surveyed 1011 people in April to explore how households with more than $100,000 in savings and super spend their money in retirement.
A key finding is that for households with savings of between $300,000 and $1 million, mindset is a better indicator of whether they will be happy and content in retirement than how much money they have.
“In the middle range of retirement savings, the size of your balance alone doesn’t explain how people experience retirement,” says Challenger’s head of retirement income research, Aaron Minney.
“Australian retirees with similar financial circumstances can have different outlooks and different retirement outcomes.
“This is where mindset can matter over money. Having the financial resources is one thing, but having the confidence to use them can make a very real difference to how you experience retirement.”
That focus on mindset and spending habits led the report to identify four types of retiree spending personas: carefree, content, cautious and concerned. In case you are wondering about the percentages, though, the survey allowed people to place themselves into two categories – hence the large “other” group.
Retirement lifestyle personas (%)
Carefree(28)
Content(21)
Other(28)
Concerned(9)
Cautious(14)
Source: Challenger, Susan Bell Research
Carefree retirees
This group is the biggest of those surveyed at 28 per cent. It’s also generally the wealthiest, with most households having more than $500,000 in super and savings. Like the Bedis, retirement can mean greater freedom for them.
Their priorities are travelling, socialising and spending time with grandchildren.
“We go overseas almost every year. We have seen most of the world in the past four or five years. We’ve been to Alaska, taken a European river cruise and Japan. That was all planned: we need $20,000 a year to do these things .… Now we will concentrate on seeing Australia,” Bedi says.
This group is confident in their financial future and focused on getting the most out of life, the report says. And 92 per cent of them are very or fairly confident that they will be able to afford their lifestyle.
Content retirees
Content retirees account for 21 per cent of those surveyed.
This group still spends, but they spend mindfully. They may choose to only have one car, stay home more or socialise a bit less. But importantly, they don’t feel as though they are missing out.
“There’s something to be said for slowing down and smelling the roses in retirement. Content retirees are spending less than they did before, but they’re comfortable with that and enjoying what they have,” Minney says.
Retirees Ranbir and Rani Singh Bedi at Ramsgate Beach. Glenn Campbell
As far as wealth goes, they are represented at the highest and lowest levels – with the bulk in the $300,000 to $1 million range, but about 10 per cent having more than $1 million.
Cautious retirees
This group accounts for 14 per cent of those surveyed. Importantly, their income levels and demographics are very similar to those of the content retirees.
But cautious retirees have a different mindset from the content.
“The mindset of the content people is different. … They’re saying, “Well, actually, this is pretty good because my life’s not as busy. I’m having a lot of fun. I’m enjoying it,” Minney says.
Cautious retirees are more worried about the future,” Minney says.
“They’re saving and crimping, and they’ve got that negative mindset … They worry about what they don’t have.”
So while they have savings, they fear running out of money.
While only half of them expect to leave any superannuation to their children, 74 per cent were confident that they could fund their lifestyle, provided they were careful.
Table with 4 columns and 4 rows of data. (column headers with buttons are sortable)
Carefree
Enjoy life now
Spending more
Very high
Content
Simpler lifestyle
Spending less by choice
High
Cautious
Protect future
Spending less from caution
High
Concerned
Fear money won’t last
Cutbacks necessary
Low
Source: Challenger, Susan Bell Research
Concerned retirees
This group represents about 9 per cent of those surveyed, but Minney notes that they would be a bigger group in a survey that didn’t start with wealth of $100,000.
These people are living on a tight budget because they have to. They have a much lower income than while they were working.
A typical comment is: “I have to watch every bit of spending and am tightening up further.”
They are more likely to be worried that they won’t have enough money to support their retirement. They rely on the age or disability pension for the bulk of their income and are stretching their savings to make them last.
They might feel like they cannot afford the minimum lifestyle that they expected in retirement.
The challenge for all the personas is predicting how much they will spend beyond the next one or two years. Only 11 per cent of retirees are confident in predicting how much money they will need over the next decade.
But that’s not something that concerns the Bedis.
“I keep having discussions with my financial adviser. … He says you can be comfortable right up to the age of 90. So you don’t have to worry or stress about anything at all,” Bedi says.
"Many, many more" whistleblowers have come forward with reports of misconduct at KPMG Australia, a parliamentary committee probing alleged client data leaks at the firm heard on Friday, raising concerns about a broader pattern of wrongdoing.
The scandal erupted in March following allegations made by an anonymous whistleblower that KPMG misused confidential client information to bid for audit contracts...
The law firms, two of the oldest and best, “stand by” the reports they wrote that mostly cleared KPMG over its scandal. The Senate inquiry isn’t so sure.
Janek Drevikovsky
Allens and Ashurst, two of the country’s oldest and best law firms, hired to pen much-criticised reports into the KPMG whistleblower’s allegations, turned up to Friday’s inquiry with a simple message: we were just following orders.
Allens partners Ross Drinnan and Chris Kerrigan with managing partner Marc Kemp at the committee on Friday. Alex Ellinghausen
“We are lawyers with legal and ethical obligations,” he said. “We were given a set of instructions. We carefully, thoroughly worked through those instructions. We delivered a report … We stand by it.”
What exactly Drinnan and his peers are standing by is now on vivid public display. The reports themselves have been uploaded to the committee’s website and Friday’s session was a tour through the highlights.
The problem, for Allens in particular, is that many of the deficiencies seem to come not from KPMG’s limiting commands – but from sloppy work.
For example, why, exactly, did Allens never actually read the Lendlease board paper that KPMG partners illicitly accessed? How could the law firm conclude it conferred no competitive advantage if they never read it?
“For us to ask to access it again would just exacerbate a breach that had already occurred,” said Allens partner Chris Kerrigan, who worked on the investigation. Instead, he and his team were “taken through the content of it by the individuals involved” and “formed a view”.
Or why, during their original investigations, did Allens fail to trawl through KPMG’s email records? It wasn’t because KPMG banned them from taking this step. Instead, explained Drinnan, “three partners” at KPMG “provided evidence … over a number of interviews, which included admissions of wrongdoing on their part”. There was no need to go digging further.
Or why, during their original inquiry, did Allens not contact Dexus, to see if the property giant had asked the auditors at KPMG working on its account not to talk about the work to those outside the team?
Because KPMG’s own documents contained “clear information … that evidenced that engagement” between the teams, Kerrigan explained. There was no need to ask Dexus, or see what Dexus thought about it all.
Again, Allens didn’t forbear because of any diktat from KPMG.
“We could have asked questions of Dexus but for the reasons I’ve just explained, we didn’t consider that necessary,” Kerrigan said.
And then, right at the end of Friday’s hearing, KPMG’s deputy chairwoman Carmel Mortell lobbed this spanner in Allens’ works. She said it was Allens’ own advice – not KPMG’s command – that limited the investigation to senior staff.
“We had quite rigorous discussions with Allens in regards to it, and we accepted their advice that it was reasonable and proportionate at the time,” she said.
Ashurst throws KPMG under the bus
Ashurst was more persuasive when blaming KPMG’s instructions. Lea Constantine, who used to head the firm’s Australia wing, opened the afternoon session by throwing the accounting firm under the bus.
“[Ashurst’s] advices were given diligently and conscientiously within the scope of the engagement and the instructions received from our client, and based on the information that was made available to the firm,” she said
Ashurst partners Lea Constantine and Jane Harvey, and NSW Law Society ethics chair David Miller. Alex Ellinghausen
She went on to say the three pieces of advice – Ashurst insists they weren’t forensic investigations – were written after KPMG assured the law firm that “ethical concerns had been considered or would be dealt with”.
And the firm’s work contained “appropriate questioning and caveats”, Constantine added.
Indeed, it does: references to the limited material Ashurst had available, a disclaimer that it never interviewed the whistleblower. Ashurst’s lawyers always knew this was a half-way job, the kind that would only fly if qualified by “caveats” and “questioning”.
Yes, the firm was following the instructions it was given. But it knew this was a serious matter, with “ethical concerns”. Why did it not push back against the instructions that prevented it from doing a better job?
And if KPMG refused to alter the instructions, why did the firms not just walk away? As David Miller, head of ethics at the NSW Law Society, told the committee: “With the benefit of hindsight, the scope and methodologies of these investigations do raise significant issues.”
But lawyers, held to exacting ethical standards, don’t have the luxury of hindsight moralising.
Back in June, KPMG made a brave and ultimately bloody stupid decision. The firm, led by then-chair Martin Sheppard, decided to look Labor senator Deborah O’Neill in the eye and say “sorry, we don’t have to give you all the information you are asking for”.
The thing is, though, it did. O’Neill had requested documents related to the audit misconduct scandal currently engulfing the firm, and was doing so as chair of the parliamentary committee investigating it. So she very much had the power to make the demand, despite KPMG’s claims the information was subject to legal professional privilege.
KPMG International leaders Bill Thomas and Gary Wingrove denied the committee’s request to appear. Sean Fitzpatrick
You’d think KPMG would have learnt from this experience. Not only did it ultimately hand over the documents, but the fight to keep them away from the committee was a major contributor to Sheppard’s resignation soon after.
The firm is back before O’Neill’s committee for a hearing on Friday, and this time it’s KPMG’s international leaders who have decided to run the gauntlet of denying the politicians’ requests.
The committee had asked KPMG International’s chairman Bill Thomas, chief operating officer (and chair designate) Gary Wingrove and chief legal counsel Anne Collins to give evidence. It was a reasonable request: KPMG International’s oversight of country firms is part of how it spruiks the company’s broader accountability.
Thomas and Wingrove also just finished a tour of KPMG’s local offices, which included no small amount of war-gaming its path out of this crisis. Quite literally: they largely met in a meeting room referred to internally as the war room.
Their tour included trying to corral support among staff and the broader partnership for new chief executive John Sams and chairman Michael Ebeid. At one point, Wingrove even pulled together the firm’s naughtier partners (which, in KPMG leadership world, doesn’t mean those behind the misconduct or the firm’s botched response to it, but rather those objecting to Ebeid’s appointment) on a call to essentially tell them to get in line, or get out.
chairman Warwick Negus; audit committee chairman Mark Ford
9.15am – Macquarie Group
chairman Glenn Stevens; chief financial officer Frank Kwok
9.45am – Optus
chairman John Arthur; chief executive Stephen Rue (via videoconference)
10.15am –
Break
10.30am – KPMG Australia
former chairman Martin Sheppard; former chief executive Andrew Yates; former chief operating officer Eileen Hoggett; former audit and assurance national managing partner Julian McPherson; former audit and assurance partner Kim Lawry
Wingrove is also a former chief executive of the Australian firm. Collins works out of its Sydney office and is among the many people the whistleblower who raised the allegations of wrongdoing at the heart of the scandal took his concerns to when the local leadership essentially ignored him. (Spoiler: KPMG International pretty much ignored him, too.)
But the trio all denied the committee’s request to appear. We hear there was quite the exchange of emails about it on Wednesday, which even contributed to the secretariat’s delays in finalising the line-up of witnesses that was released late that afternoon.
It’s caused a furore within KPMG, at least among the partners who are aware of the request. Some have even asked whether the committee will go as far as compelling the trio to appear (an unlikely outcome, unless they keep up their rejections when they are called for future hearings).
It adds to the frustration that various other past and present KPMG partners involved in the misconduct have also been trying (with mixed success) to defer their evidence, thereby delaying the resolution of the whole scandal. Mental health reasons are the most common reason they are citing, but ex-HR head Dorothy Hisgrove jetted off to Europe despite the imminent hearing.
It also ties into a broader problem at the firm, namely the discontent over whether KPMG International should be trying to take control or the local leadership can still be trusted.
A crucial turning point in PwC’s path out of its tax leaks scandal was its global arm parachuting in UK partnerKevin Burrowes to take over as Australian chief executive. Within KPMG, many want their own firm to take a similar approach. On the other side, there are concerns about the level of senior job losses that ensued when KPMG International took over its South Africa offices after separate scandals in 2018.
KPMG International’s excuse for Wingrove, Collins and Thomas not appearing, apparently, is that the secretariat sent the initial email requesting their attendance to an email address connected to the local rather than global firm.
Huh? KPMG International’s website boasts of its “global reach”, relationships with country firms and role as the “co-ordinating entity” across the network. KPMG Australia talks of the firm’s “worldwide presence”. Yet, they aren’t able to forward each other emails? Or just tell each other? They’ve all been in the same war room in recent weeks!
Good luck with that excuse. It’s nearly as cute as claiming documents with scant legal advice in them are subject to legal professional privilege.
Hannah Wootton is a Rear Window columnist, based in the Melbourne newsroom. Send Hannah tips securely on hannahwootton.04 on encrypted messaging platform Signal. Connect with Hannah on Twitter. Email Hannah at hannah.wootton@afr.com
KPMG had already fumbled its own investigation, a committee heard on Friday, when deputy counsel James McClelland declared ‘the truth was not told in those interviews’ by partners.
KPMG’s original investigation into its rogue audit division was compromised by the lies told by its partners, one of its senior lawyers confessed before parliament.
Meanwhile, the culture at KPMG became so toxic that the senator who put the big four firm on trial, Deborah O’Neill, likened partners’ immunity to professional breaches to “a frog that’s been boiled”.
KPMG had already fumbled its foundational investigation, the committee heard on Friday. Deputy counsel James McClelland who ran the internal probe, appeared close to tears as he declared “the truth was not told in those interviews,” by the partners he met with, and that he was restricted in scope.
However, Ms O’Neill reminded Mr McClelland of his instruction at the time that if anyone was to run into the whistleblower, “run past him and ignore him.” The whistleblower was “trying to throw mud at people”.
Heated questioning of five senior partners that have left or are about to leave KPMG culminated in hours of blame-shifting and remorseless testimony in Canberra on Friday.
Based on the evidence before the Parliamentary Joint Committee, they appeared to reject the premise of their misconduct, while at the same time parroting a generic regret for decisions that were made at the time, and a lack of recollection about specific wrongdoing.
KPMG partners snooped on clients, enjoyed corporate hospitality and capitalised on relationships with retired partners climbing the non-executive director ladder to win lucrative audit work. None of this information would have come to light but for a whistleblower who was driven out of the firm.
Former chief operating officer Eileen Hoggett was asked to explain an email she had written to her executive assistant that confirmed she planned to allow another partner to access a confidential client board document that she had printed out and stashed in her locker.
Eileen Hoggett gives evidence. Picture: NewsWire / Martin Ollman
“This email, I became aware of three weeks ago,” Ms Hoggett started before Senator O’Neill interrupted animatedly.
“No, no, no that is not a satisfactory answer … you are a conscious, living, breathing person earning $1.5m a year when you wrote that email,” said the senator. Ms Hoggett was terminated when the email evidence came to light.
At another point, Ms Hoggett said of Lendlease’s improperly accessed board papers, “the documents were put in my locker,” which led Senator O’Neill to question who else could have access to it.
Ms Hoggett appeared aggrieved by the fact that she had been “expelled” from the partnership, which meant loss of her bonus, holiday entitlements and retirement benefits. She would, Ms Hoggett declared, be seeking further clarification of this “unprecedented” event and which could include legal action against the firm.
Fellow auditor Kim Lawry told the committee she couldn’t recall a photograph found on her phone of a confidential Lendlease audit board scorecard that had been shared with fellow auditors while trying to win the Westpac contract. At the time, Lendlease’s chairman was Michael Ullmer, who sat on the board of Westpac and went on to become its audit chair.
“I don’t know if I took the photo,” Ms Lawry told the committee. “It’s disappointing because it is clouding the significant effort put in by the team (to win the $38m Westpac contract)”, added Ms Lawry, who has agreed to exit KPMG.
Mr Ullmer expressed disappointment at KPMG and his former Westpac board member Peter Nash. KPMG won the account from PwC and during the time the audit was up for tender, Mr Nash stayed over at the house of then KPMG chair Martin Sheppard.
Martin Sheppard. Picture: NewsWire / Martin Ollman
After this publication revealed the platonic sleepover and close personal relationship, Mr Nash was asked to step down from the Westpac board.
Mr Ullmer agreed Mr Nash had “failed” because of the “social conduct during the tender process”.
The breaches of confidentiality only came to light after Senator O’Neill aired claims by the whistleblower under parliamentary privilege. The claims have largely proved to be correct but had been dismissed in 2024 after KPMG’s cursory investigation.
The two law firms that investigated the whistleblower’s claims, Ashurst and later Allens, sought to defend claims of insufficient diligence in what should have warranted a forensic investigation.
Senator O’Neill also aired new claims in parliament on Friday that audit partners had discussed “strategy and confidential transactions not announced to the market”.
Deborah O'Neill Picture: NewsWire / Martin Ollman
Outgoing general counsel Louise Capon made the error of reverting to KPMG’s blind spot: it could have acted years ago on the misconduct, but chose not to.
“As information is arising … the firm is moving to sanction people appropriately,” Ms Capon started before Ms O’Neill corrected her wording, declaring that KPMG had always had the information about the breaches of confidentiality.
As a result, eight people have left the firm including chief executive Andrew Yates and Mr Sheppard who stood down
Directors from Westpac, Dexus, and Optus have raised concerns about audit quality amid KPMG’s data misuse scandal and called for tougher regulation of the wider professional services industry.
Westpac director and former Lendlease chairman Michael Ullmer, who started his career at KPMG, told Friday’s parliamentary hearing that it was time for more regulation of the industry.
Westpac director and audit committee chairman (and former KPMG staffer) Michael Ullmer at the inquiry on Friday expressed his concerns about audit quality. Alex Ellinghausen
“Now’s the time for a complete shift in this because of the matters that have come up in this committee,” he said, and pointed to UK regulations that require audit firms to be rotated every 10 years and put to tender every 20 years.
Ullmer also castigated the trend for professional firms to appoint independent directors, warning anyone asked to serve on such a board to be wary.
“You need to understand that when the chips are down, it’s the partners who run the firm, and if you’re not a partner in the firm … when difficult situations emerge, the partners will naturally come together and say, ‘We own the firm, and we are going to decide how this goes forward,’” he said.
Optus chairman John Arthur said the governance arrangements of listed companies, such as having an independent board, cannot be effectively “grafted” onto a partnership, which are fundamentally different beasts.
“One of the challenges we are seeing in professional firms, and this is not just accountants, is that they are grafting onto a partnership structure … governance arrangements that belong to corporations, and it is not always a happy marriage.”
Arthur said the problems at KPMG are fundamentally related to culture and leadership. “I think they need to remind themselves that they are first and foremost professionals, and that [their] business issues are secondary to those professional responsibilities, and I think that needs to come from the chief executive.”
Former KPMG chairman Martin Sheppard admitted there was tension between “partner directors” and “independent directors”. The inquiry heard that the firm’s partners are paid up to 10 times more than the independent directors.
“We’ve [KPMG] tried independent directors, but it is a difficult tension between partner directors and independent directors,” he said.
The scandal is also not showing any signs of abating.
Inquiry chairman Senator Deborah O’Neill said there are “many, many more” whistleblowers who have raised concerns about KPMG, “and they are talking about a repeat of the same behaviour”.
Greens senator Barbara Pocock demanded KPMG put together a list of any ethical concerns raised by staff members in the past decade in which the firm made a payment.
The scandal is also subject to probes by the federal Finance Department, Australian Securities and Investments Commission, Tax Practitioners Board, Chartered Accountants ANZ, several state governments, and inquiries into the allegations by individual clients.
Earlier, Arthur said KPMG’s use of his company’s confidential information when bidding for work with rival Telstra was “an egregious breach of professional responsibilities” and “a flagrant breach of duty owed to Optus”.
He said Optus was continuing to use KPMG as its auditor for now, but largely because it did not have time to run a process to replace it before its next financial report was due.
The telco had needed to adopt “a much more rigorous control environment” on its audit to allow it to continue using KPMG despite a loss of trust in the firm.
“We have moved from a ‘trust-slash-confidence’ environment, to a ‘trust-slash-confidence and verify’ environment,” Arthur said and that Optus “will be watching like a hawk” over the firm’s work.
Dexus chairman Warwick Negus said his board had similarly been too busy preparing its statutory accounts to decide whether the company will keep KPMG as its auditor, but “this decision should be considered once we have more information, including from the work of this committee”.
He said the firm’s conduct had been “disappointing” and “inappropriate”.
Edmund Tadros leads our coverage of the professional services sector. He is based in our Sydney newsroom.Email Edmund at edmundtadros@afr.com.au
Hannah Wootton is a Rear Window columnist, based in the Melbourne newsroom. Send Hannah tips securely on hannahwootton.04 on encrypted messaging platform Signal. Connect with Hannah on Twitter. Email Hannahat hannah.wootton@afr.com
