Powered by momentummedia
nestegg logo
Powered by momentummedia
nestegg logo
nestegg logo

Retirement

Proposed super reforms to rob millions of Australians

  • January 05 2021
  • Share

Retirement

Proposed super reforms to rob millions of Australians

By Cameron Micallef
January 05 2021

Australia’s largest union has rejected the government’s new super reforms on the basis it will leave members worse off long-term due to being “stapled” to a high-fee fund.

Proposed super reforms to rob millions of Australians

Proposed super reforms to rob millions of Australians

author image
  • January 05 2021
  • Share

Australia’s largest union has rejected the government’s new super reforms on the basis it will leave members worse off long-term due to being “stapled” to a high-fee fund.

Proposed super reforms to rob millions of Australians

As part of the Your Super, Your Future government proposal, members who joined a fund would see their superannuation follow them throughout their lives, to avoid creating multiple accounts.

The government will also try to increase transparency and accountability of how superannuation funds are performing.

In a statement to the federal Senate inquiry into the superannuation sector, the ACTU has criticised the reforms on the basis members would be stapled into poorly performing funds. 

Advertisement
Advertisement

The union points out the government has proposed changes that will favour for-profit funds, as performance benchmarking is based on net investment return (NIR) rather than net benefits to members.

“It is no coincidence that administration fees are excluded from benchmark proposals, as for-profit funds performances will be overstated to members and potential members,” ACTU assistant secretary Scott Connolly said. 

“If these laws are passed, for-profit funds will have a systemic advantage over all-profit-to-member funds, leaving workers worse off.

If these proposals become law, from 1 July 2021, all people with an existing superannuation fund will be stapled to their current fund, meaning predatory for-profit funds will target first time bank openers to nominate a super account with them, locking them into a poor performing default fund for life.”

An attack on ideology

The union has also criticised the proposal saying excluding fees from funds’ performances is an attack based on ideology rather than what is in the best interests of members, as Australians with better performing funds and lower fees are more likely to have a greater retirement outcome. 

“Extraordinarily, the Government’s proposals also seek to grant the relevant Minister the authority to deem any expense, investment, or activity, by any fund, at any time, illegal,” the industry statement read. 

The union states funds would be beholden to a single minister’s preference as the minister is not required to give notice nor reason, and these regulations are not able to be challenged in court.

“Despite the Banking Royal Commission finding for-profit funds blatantly rorting members, the Government continues to favour them by making benchmarking based on net investment return,” Mr Connolly concluded.

Proposed super reforms to rob millions of Australians
Proposed super reforms to rob millions of Australians
nestegg logo

Forward this article to a friend. Follow us on Linkedin. Join us on Facebook. Find us on Twitter for the latest updates
Rate the article

About the author

author image

Cameron is a journalist for Momentum Media's nestegg and Smart Property Investment. He enjoys giving Aussies practical financial tips and tricks to help grow their wealth and achieve financial independence. As a self-confessed finance nerd, Cameron enjoys chatting with industry experts and commentators to leverage their insights to grow your portfolio.

About the author

author image
Cameron Micallef

Cameron is a journalist for Momentum Media's nestegg and Smart Property Investment. He enjoys giving Aussies practical financial tips and tricks to help grow their wealth and achieve financial independence. As a self-confessed finance nerd, Cameron enjoys chatting with industry experts and commentators to leverage their insights to grow your portfolio.

more on this topic

more on this topic

From the web

Recommended by Spike Native Network

More articles

Website Notifications

Get notifications in real-time for staying up to date with content that matters to you.