Retirement
New super laws divide industry groups
Your Future, Your Super legislations have reached Parliament, dividing opinions among key stakeholders.
New super laws divide industry groups
Your Future, Your Super legislations have reached Parliament, dividing opinions among key stakeholders.
Those in favour include Super Consumers Australia’s director of super, Xavier O’Halloran, who points out that, overall, members will be better off as the entire sector is forced to lift standards due to the regulations.
They point to stapling reforms, which will see members remaining with one fund throughout their working life.
“Australians are paying far too much in fees across multiple accounts. These reforms clean up zombie accounts that have eaten away at people’s retirement savings,” Mr O’Halloran said.
Those opposed say “substantial changes” to stapling legislations are needed to stop consumers from being stuck with an underperforming fund.
“If stapling occurs before underperformance is substantially addressed, members who are currently in underperforming funds will be stapled to those funds,” Eva Scheerlinck, chief executive of the Australian Institute of Superannuation Trustees (AIST), said.
Super Consumers have also advocated for the Your Super fund comparison tool, calling it a leap forward in informing consumer decision-making by showing people the best performers in the market, while the comparison tests will help improve standards.
“We support legislation that will see super products subject to annual performance tests. In its current form, the test will turn up the heat on underperformance,” he said.
“But we recommend it be expanded to include administration fees, to put a spotlight on inefficiently administered funds.”
However, Industry Super Australia (ISA) accused the government of not taking sector feedback seriously, noting that admin fees have still been left out of the performance test.
“We’re disappointed that sensible feedback from across the sector has been ignored to this point and will further examine the concerning regulation-making powers that have been added. Ultimately, we’d like to see the Parliament enact changes that will deliver members more,” said ISA CEO Bernie Dean.
ISA also warned that new powers — which could allow the government to unilaterally prohibit an investment or payment regardless of whether it is considered to be in the best financial interests of members — could see “extreme elements” of the Coalition government attempt to ban investment in ESG and affordable housing, saying “the regulatory kill switch is unnecessary and an ideological overreach”.
“An added regulation power is equally concerning. It would allow the Minister (sic) to dictate what is in members’ best financial interest — giving politicians unfettered control over workers’ super,” ISA said.
The AIST went further, saying the bill “lacks important detail” and could see any super fund investment or expenditure banned.
“This is an extraordinary overreach of power with no precedent in this country. This change removes the certainty needed for long-term investing and risks significant impact on investment outcomes for members,” Ms Scheerlinck said.
The new legislation has yet to be passed by the Parliament.
“These measures will reduce waste in the system and save Australian workers $17.9 billion over 10 years by holding underperforming funds to account and strengthening protections around the retirement savings of millions of Australians,” Treasurer Josh Frydenberg said.
“Australians currently pay $30 billion per year in superannuation fees, while 3 million accounts sit in underperforming funds worth over $100 billion in retirement savings.”
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