The Your Future, Your Super has passed after receiving support from the crossbench, including senator Pauline Hanson.
The Labor Party, which strongly opposed the bill, accused the Liberal Party of meddling with superannuation on ideology, instead of putting the interests of ordinary people at heart.
The bill failed to pass on the first try, with the Liberal Party voting against its own bill, allowing for Ms Hanson’s amendments to make it through. One of the amendments was to increase the concessional contribution cap for workers aged 67 and over.
“I don’t know if this has ever happened before, when the government voted against the progress against its own bills to allow Senator Hanson to pass her own bill,” Senator Nick McKim said.
The government’s contentious veto power over super fund investment decisions was previously removed.
Critics say members will be worse off
Over the course of the year, the government has argued in support of one of the key aims of the legislation, which is to avoid the fee drain that occurs when workers, often unknowingly, open accounts with each new employer. This has now been reversed with the legislation foreseeing a lifelong relationship between a fund and a member, under what's being called a "stapling" mechanism, which is set to commence from 1 November 2021.
And while the government has argued this would save consumers $17.2 billion over 10 years, Industry Super Australia (ISA) said the new laws could trap Australians into dud superannuation products, potentially costing millions of workers almost $230,000 in retirement savings.
“Senators that vote to shackle workers to the worst-performing funds will punch a huge hole in the savings of many Australians,” ISA chief executive Bernie Dean said.
“Senators know full well that most people don’t spend a lot of time thinking about super and deserve to be protected from ending up chained to a dud fund.”
A further flaw in the legislation, according to critics, is that more than $500 billion of members’ savings will be shielded from performance tests – including products that bore the brunt of criticism during the banking royal commission.
Under the legislation, funds that fail the test will be required to write to members informing them of their underperformance. The consequence for consecutive failures is new members are barred from joining.
While on the principle it seems to act as a protection for members, the ISA noted that members that do not act on the letters will stay trapped in the inferior product and will have their savings drained.
“The Senate can boost members’ savings and stop them ending up with too many super accounts by simply mandating workers can only be stapled to the best-performing funds,” Mr Dean concluded.
Recent data released by the Australian Prudential Regulation Authority (APRA) revealed that superannuation assets under management surpassed $3 trillion at the end of March.
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