Retirement
Government passes controversial superannuation reforms
The controversial Your Future, Your Super legislation has passed the Senate and will come into effect from 1 July 2021, with critics warning that members could be $230,000 worse off under the changes.
Government passes controversial superannuation reforms
The controversial Your Future, Your Super legislation has passed the Senate and will come into effect from 1 July 2021, with critics warning that members could be $230,000 worse off under the changes.
The Your Future, Your Super has passed after receiving support from the crossbench, including senator Pauline Hanson.
The Labor Party, which strongly opposed the bill, accused the Liberal Party of meddling with superannuation on ideology, instead of putting the interests of ordinary people at heart.
The bill failed to pass on the first try, with the Liberal Party voting against its own bill, allowing for Ms Hanson’s amendments to make it through. One of the amendments was to increase the concessional contribution cap for workers aged 67 and over.
“I don’t know if this has ever happened before, when the government voted against the progress against its own bills to allow Senator Hanson to pass her own bill,” Senator Nick McKim said.
The government’s contentious veto power over super fund investment decisions was previously removed.
Critics say members will be worse off
Over the course of the year, the government has argued in support of one of the key aims of the legislation, which is to avoid the fee drain that occurs when workers, often unknowingly, open accounts with each new employer. This has now been reversed with the legislation foreseeing a lifelong relationship between a fund and a member, under what's being called a "stapling" mechanism, which is set to commence from 1 November 2021.
And while the government has argued this would save consumers $17.2 billion over 10 years, Industry Super Australia (ISA) said the new laws could trap Australians into dud superannuation products, potentially costing millions of workers almost $230,000 in retirement savings.
“Senators that vote to shackle workers to the worst-performing funds will punch a huge hole in the savings of many Australians,” ISA chief executive Bernie Dean said.
“Senators know full well that most people don’t spend a lot of time thinking about super and deserve to be protected from ending up chained to a dud fund.”
A further flaw in the legislation, according to critics, is that more than $500 billion of members’ savings will be shielded from performance tests – including products that bore the brunt of criticism during the banking royal commission.
Under the legislation, funds that fail the test will be required to write to members informing them of their underperformance. The consequence for consecutive failures is new members are barred from joining.
While on the principle it seems to act as a protection for members, the ISA noted that members that do not act on the letters will stay trapped in the inferior product and will have their savings drained.
“The Senate can boost members’ savings and stop them ending up with too many super accounts by simply mandating workers can only be stapled to the best-performing funds,” Mr Dean concluded.
Recent data released by the Australian Prudential Regulation Authority (APRA) revealed that superannuation assets under management surpassed $3 trillion at the end of March.
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