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.
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.
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