Retirement
Big super seeks to ‘raise the bar’ on industry changes
Australia’s largest superannuation fund wants the federal government to go a step further on the planned “Your Future, Your Super” reforms and take a stronger approach to underperforming funds.
Big super seeks to ‘raise the bar’ on industry changes
Australia’s largest superannuation fund wants the federal government to go a step further on the planned “Your Future, Your Super” reforms and take a stronger approach to underperforming funds.
On Tuesday, 6 October, Treasurer Josh Frydenberg said the Your Future, Your Super package would allow employees to take their super fund with them when changing jobs, “name and shame” underperforming funds, and demand funds to give more information to the public about their investment decisions.
Industry Super Australia chief executive Bernie Dean has welcomed the changes to superannuation, with members assuming funds will “do the right thing”.
“It can cost young workers more than $500,000 – that’s the difference between being in a top-performing fund and a dud at retirement,” Mr Dean said.
“So, we welcome the news that the federal government is at last planning to act on fund underperformance. Any changes should deliver more money to members, not less.”
During a hearing of the standing committee on economics on Friday, 6 November, a member of Industry Super Australia, Australian Super, told the government that superannuation funds should act in members best interests.
“The objectives of the [Your Future, Your Super] are wholly supported by Australian Super,” chief executive Ian Silk said.
“There are a number of areas we would propose to the government to improve the likelihood of those objectives being met.”
“This is not a mealy-mouthed ‘agree in principle’. We’re looking to raise the bar, not weaken it,” he said.
While highlighting the fund “wholly supports the objectives”, Mr Silk believes more of the detail is needed.
“Much of the detail remains to be revealed in the legislation and in regulations, but from what we have observed through the budget night announcements, there are a number of areas that we would propose to the government – and we’ll seek to do that when the bills are available – to improve the likelihood of those objectives being met,” Mr Silk said.
Mr Silk believes the reforms should apply to all superannuation funds and options, and questioned why they only measured investment fees, calling the decision to exclude administration fees “an oversight”.
“The government has quite rightly said, ‘people are interested in what lands in their account’, and what lands in their account is a function of contributions and investment returns, less investment fees and less admin fees,” Mr Silk said.
“The government’s proposal seems to take out admin fees from the calculation. We say that, self-evidently, it should include all fees, so that’s a really critical change we think should apply.”
Weight on individuals
According to the CEO, the new laws need to go a step further, with the current proposed changes putting the weights on individuals instead of penalising the fund.
“The first penalty is funds will be required to write to their members if they are an underperforming fund.”
“That requires the members to receive it, open it, understand it and importantly to act on it with the implication of receiving it to change funds,” Mr Silk said.
After three years of underperformance, the fund is penalised to the extent it can’t receive new default members.
“The problem with both of those is that the action is on the individual. In the second case, individuals remaining in the fund could be stuck in a zombie fund.
“So, we say the onus should be on regulators to get rid of poor-performing funds instead of relying on individuals to respond,” Mr Silk concluded.
About the author
About the author
Superannuation
Aware Super takes on Australia's gender retirement gap, aiming for financial equality
Aware Super, one of Australia's largest superannuation funds with a 70 per cent female membership, is on a mission to close the gender gap that sees women retire with 30 per cent less super than men ...Read more
Superannuation
Age Pension increase prompts Australians to review their finances
The increase in the Age Pension, which takes effect today, should serve as a prompt for many older Australians to ensure they're maximizing their income as cost-of-living pressures persist, according ...Read more
Superannuation
Retirement reimagined as Australian optimism meets inflation worries in 2023 super fund insights
The latest reports on retirement confidence among Australians present a spectrum of sentiments, with fresh data revealing surprising optimism in some quarters while exposing underlying concerns in ...Read more
Superannuation
Aussie retirees face a shortfall as ideal retirement nest egg doubles what super will deliver
As Australians look towards retirement, the desired superannuation balance that many believe will ensure a comfortable retirement has significantly outpaced what they are on track to actually save. Read more
Superannuation
Super funds eye 6.5% return in 2023, despite a rocky start
As the year draws closer to its climax, Chant West unveils its projection for super funds in what can only be described as a year of economic ebbs and flows. Read more
Superannuation
A deep dive into Australia’s superannuation system
Australia has a robust retirement savings system known as superannuation designed to provide financial security to Australians in their post-work years. Read more
Superannuation
50,000 super fund members impacted by data breach
Around 50,000 member records were impacted by the breach that took place earlier this month. Read more
Superannuation
Two super funds tipped to reach $1tn by 2040
KPMG has released the findings from a new review. Read more
Superannuation
Aware Super takes on Australia's gender retirement gap, aiming for financial equality
Aware Super, one of Australia's largest superannuation funds with a 70 per cent female membership, is on a mission to close the gender gap that sees women retire with 30 per cent less super than men ...Read more
Superannuation
Age Pension increase prompts Australians to review their finances
The increase in the Age Pension, which takes effect today, should serve as a prompt for many older Australians to ensure they're maximizing their income as cost-of-living pressures persist, according ...Read more
Superannuation
Retirement reimagined as Australian optimism meets inflation worries in 2023 super fund insights
The latest reports on retirement confidence among Australians present a spectrum of sentiments, with fresh data revealing surprising optimism in some quarters while exposing underlying concerns in ...Read more
Superannuation
Aussie retirees face a shortfall as ideal retirement nest egg doubles what super will deliver
As Australians look towards retirement, the desired superannuation balance that many believe will ensure a comfortable retirement has significantly outpaced what they are on track to actually save. Read more
Superannuation
Super funds eye 6.5% return in 2023, despite a rocky start
As the year draws closer to its climax, Chant West unveils its projection for super funds in what can only be described as a year of economic ebbs and flows. Read more
Superannuation
A deep dive into Australia’s superannuation system
Australia has a robust retirement savings system known as superannuation designed to provide financial security to Australians in their post-work years. Read more
Superannuation
50,000 super fund members impacted by data breach
Around 50,000 member records were impacted by the breach that took place earlier this month. Read more
Superannuation
Two super funds tipped to reach $1tn by 2040
KPMG has released the findings from a new review. Read more