Retirement
Last-minute win for ‘fee gougers’ after Your Future, Your Super change
Retirement
Last-minute win for ‘fee gougers’ after Your Future, Your Super change
One of Australia’s biggest super funds has issued a warning after last-minute changes to the government’s Your Future, Your Super reforms.
Last-minute win for ‘fee gougers’ after Your Future, Your Super change
One of Australia’s biggest super funds has issued a warning after last-minute changes to the government’s Your Future, Your Super reforms.
One of the most significant inclusions in Australia’s Your Future, Your Super reforms just got a controversial tweak.
While the original legislation, which was passed through the Senate in June and came into effect from July, still requires super funds to complete an annual performance test, the way in which funds are assessed has been shifted.
The newly finalised regulations will now only examine the administration fees of any given super fund for the previous year.
Earlier incarnations of the new regulations would have required funds to disclose the average of the previous eight years.
Federal Minister for Superannuation, Financial Services and the Digital Economy, senator June Hume said that the change “builds on previous changes to strengthen the performance test, including ensuring that administration fees are part of the performance test and by adding Australian unlisted infrastructure and unlisted property as specific asset classes covered by the performance test”.
However, the move has invited criticism from members of the super industry, who have accused the government of enabling “dud super funds to whitewash years of fee-gouging”.
Industry Super Australia chief executive Bernie Dean issued a warning that “millions of Australian workers unknowingly stuck in a dud super fund will be the biggest losers from the government’s sneaky backflip on performance tests that were meant to clean them out of the system”.
Mr Dean said the changes could allow underperforming funds to sneak through the very performance tests designed to weed them out, costing Australian workers as much as $230,000 over the long run.
Mr Dean also called out a number of other last-minute changes to legislation, such as the watering down of the warning letter that will be sent to members if their fund fails the annual performance test.
Rather than being encouraged to seek a different fund entirely if their original fund fails is listed as underperforming, members are now set to be offered alternative products from their current fund.
“The government needs to reverse its backflip and protect working Australians, not dodgy financial services companies,” he said.
On the other side of things, AMP Australia CEO Scott Hartley welcomed the last-minute change.
“Using administration fees from the most recent financial year in the calculation of the annual performance assessment is sensible,” he said.
According to him, the change “will ensure funds can be assessed on the fees that they are presently charging members and acknowledges the inconsistencies in the historical recording of fee data across funds”.
The Financial Services Council was also even-handed about the changes, with FSC CEO Sally Loane celebrating the implementation of super fund stapling.
“Every Australian with superannuation will benefit now that the regulations make stapling a reality. FSC analysis shows that stapling will save consumers up to $1.8 billion in fees in the first three years,” Ms Loane said.
She said that this reform, and the inclusion of fees in the performance assessment, “will ensure that superannuation funds not only have to lower their fees to attract new members, but keep their fees low to pass the yearly assessments”.
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