Retirement
How you could be $160k worse off in retirement
The government’s new Your Future, Your Super legislation could be casting a favourable light on “high-fee, poor-performing retail funds”, which could cost retirees as much as $160,000, according to an industry expert.
How you could be $160k worse off in retirement
The government’s new Your Future, Your Super legislation could be casting a favourable light on “high-fee, poor-performing retail funds”, which could cost retirees as much as $160,000, according to an industry expert.
The draft Your Future, Your Super legislation will subject superannuation funds to an annual performance test, excluding administration fees and other non-investment charges, which Industry Super Australia (ISA) believes will give poor-performing retail products a leg up.
The ISA pointed to several different research papers, all of which showed that net returns after fees and taxes are the most relevant fund performance measurement for members.
However, under current measures, APRA will be tasked with assessing the performance of super funds annually, with those that are found to be underperforming two years in a row set to be barred from receiving new members. Members will only be notified if they are in an underperforming product if returns drop below 50 basis points off the benchmark.
According to the industry funds body, without stronger performance tests, “dud for-profit super funds” can go on charging up to four times the median fees, costing Australians up to $160,000.
“When it comes to workers’ retirement savings, measuring the performance of super funds should be a matter of one in all in – every super fund and every fee,” said ISA’s deputy chair Matthew Linden.
“The government’s plan to shield the worst-performing retail funds from proper scrutiny could mean millions of workers get stuck in a dud fund for life.”
As such, the ISA has accused the government of favouring the retail funds, claiming retail products have administration fees that are 75 per cent higher than the median MySuper member.
Administration fees that cost member balances as much as 1.02 per cent could fly under the radar, the industry body has said.
“Workers can only be protected if every fund and every fee is included in the tests. Anything less than that reeks of vested interests inappropriately influencing the benchmarks and the government running a protection racket for dud-profit-generating funds – and that could leave workers worse off,” he concluded.
RELATED ARTICLES
About the author
About the author
Superannuation
Australia's super performance test transforms investing: What's the next move?
APRA’s latest performance test has done more than name and shame lagging super options; it has rewired investment strategy, compressed fees and accelerated consolidation across the $3Read more
Superannuation
Australia's super test dilemma reform could boost long-term gains while keeping accountability sharp
APRA’s latest performance test results have reignited a structural debate: can Australia hold funds to account while still backing the nation’s long-horizon investment needs? With the government ...Read more
Superannuation
Super funds rethink strategy as APRA's performance test hits a fork in the road
The latest performance test results have reignited debate over Australia’s superannuation benchmarking regime and prompted a formal government review. Behind the headlines, boards are quietly rewiring ...Read more
Superannuation
Aware Super enhances digital tools for financial advisers, boosting efficiency and client engagement
Aware Super has unveiled a suite of new digital features designed to streamline the workflow for financial advisers and their clients. This significant upgrade includes direct data feeds to Xplan and ...Read more
Superannuation
Super funds flip the script as APRA's performance test sparks strategic overhaul
Australia’s performance test has lifted the floor on retirement outcomes—and divided the industry in the process. After early shockwaves, failure rates have fallen and fees have trended down, but ...Read more
Superannuation
Rewiring Australia’s super performance test: from compliance brake to capital engine
Can an accountability tool double as a nation-building lever? Canberra’s review of the superannuation performance test aims to preserve member protection while freeing funds to back long-dated assets ...Read more
Superannuation
Superannuation guarantee rate rises to 12 per cent as parental leave changes take effect
The superannuation guarantee rate has increased from 11.5 per cent to 12 per cent from Tuesday, with super contributions also being added to Commonwealth Parental Leave Pay for the first time. Read more
Superannuation
Rest's Sustainable Growth option achieves highest sustainability classification
Rest superannuation fund has achieved the highest sustainability classification for its Sustainable Growth investment option from the Responsible Investment Association Australasia. Read more
Superannuation
Australia's super performance test transforms investing: What's the next move?
APRA’s latest performance test has done more than name and shame lagging super options; it has rewired investment strategy, compressed fees and accelerated consolidation across the $3Read more
Superannuation
Australia's super test dilemma reform could boost long-term gains while keeping accountability sharp
APRA’s latest performance test results have reignited a structural debate: can Australia hold funds to account while still backing the nation’s long-horizon investment needs? With the government ...Read more
Superannuation
Super funds rethink strategy as APRA's performance test hits a fork in the road
The latest performance test results have reignited debate over Australia’s superannuation benchmarking regime and prompted a formal government review. Behind the headlines, boards are quietly rewiring ...Read more
Superannuation
Aware Super enhances digital tools for financial advisers, boosting efficiency and client engagement
Aware Super has unveiled a suite of new digital features designed to streamline the workflow for financial advisers and their clients. This significant upgrade includes direct data feeds to Xplan and ...Read more
Superannuation
Super funds flip the script as APRA's performance test sparks strategic overhaul
Australia’s performance test has lifted the floor on retirement outcomes—and divided the industry in the process. After early shockwaves, failure rates have fallen and fees have trended down, but ...Read more
Superannuation
Rewiring Australia’s super performance test: from compliance brake to capital engine
Can an accountability tool double as a nation-building lever? Canberra’s review of the superannuation performance test aims to preserve member protection while freeing funds to back long-dated assets ...Read more
Superannuation
Superannuation guarantee rate rises to 12 per cent as parental leave changes take effect
The superannuation guarantee rate has increased from 11.5 per cent to 12 per cent from Tuesday, with super contributions also being added to Commonwealth Parental Leave Pay for the first time. Read more
Superannuation
Rest's Sustainable Growth option achieves highest sustainability classification
Rest superannuation fund has achieved the highest sustainability classification for its Sustainable Growth investment option from the Responsible Investment Association Australasia. Read more
