Retirement
Senator slams superannuation industry’s ‘complacency and inertia’
Senator Jane Hume has hit out at the superannuation industry’s use of unnecessary insurance for Australian workers.
Senator slams superannuation industry’s ‘complacency and inertia’
Senator Jane Hume has hit out at the superannuation industry’s use of unnecessary insurance for Australian workers.
At the Financial Services Council Summit held in Sydney yesterday, the Assistant Minister for Superannuation, Financial Services and Financial Technology questioned why the government had to intervene to stop Australians getting a “bad deal” on insurance.
“It’s only now – with the writing on the wall, where it looks like the numbers are there to pass this reform to eliminate unnecessary insurance – that I have a whole bunch of industry players acknowledging ‘oh yeah, we agree something has to be done about this’,” she said.
According to the senator, “young workers deserve a fair go”.
“If they want insurance within super, they should be free to choose it. But, in many cases, the arguments for automatic cover – mainly coming from those with vested interests – are weak,” she offered.
Ms Hume outlined that 96 per cent of people under 25 do not have any dependants and that the premiums paid by women under 25 are more than 330 per cent of the true cost of insuring them.
While acknowledging the work of some funds, such as AustralianSuper, the senator questioned why so many other industry players have been so slow to react.
“If there’s one thing that adds fuel to the perception that the superannuation sector, for all its talk about putting members first, is in reality beset with complacency and inertia, it’s this,” she stated.
“Why isn’t the industry taking action itself on longstanding problems we all know are there, instead of waiting to be dragged kicking and screaming by government towards a solution?”
For some people, putting a stopper to the insurance fee drain can be the difference between being 25 with some savings for retirement or starting with nothing, Ms Hume highlighted.
The system must do better, according to the senator, especially since Australians have to sacrifice one dollar in 10, and which will soon be more.
“The royal commission showed that superannuation funds were not outside the misconduct that plagued the financial sector. The royal commission’s final report included 15 recommendations and one additional measure specifically relating to the superannuation sector,” Ms Hume flagged.
The senator has also called for the industry to proactively eliminate the holding of multiple super accounts by Australians, to prevent persistent sub-par performance by trustees, to ensure boards have excellent governance, and to innovate for the provision of new solutions for income products in retirement.
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