The government is being urged to ignore the “self-interest” of the superannuation funds and pass the Your Future, Your Super reforms to help members pocket an extra $50,000 in retirement.
Super consumers are calling for the government to pass through the hotly debated changes to superannuation, highlighting the importance of shining a light on underperforming funds.
Xavier O’Halloran, director of Super Consumers Australia, said modelling from his organisation has shown that there are five super products that are not considered underperformers that would fail the proposed test if administration fees are included.
“This legislation is about making sure super funds act in the best interests of members. If it is going to deliver on this intent, it needs to apply performance tests to all products and apply scrutiny to administration fees. Lowering fees by just 0.5 per cent could see a typical person retire with an extra $55,000,” says Mr O’Halloran.
Under the You Future, Your Super reforms, duplicate accounts, which lead to duplicate fees for members, will also be removed.
The consumer advocacy group pointed out that failure to act will see another 850,000 duplicate accounts created this year. The industry’s failure to address these duplicates has seen a typical worker’s balance reduce by $51,000 in retirement.
“This legislation will finally free people from the scourge of duplicate accounts. Coupled with performance testing, super funds will face real repercussions if they fail to deliver good returns on people’s retirement savings,” Mr O’Halloran said.
Super consumers also highlighted some industry players have embarked on a “self-preservation mission”, failing to recognise the intersecting impact of each of the measures.
“This questionable framing from part of the industry assumes stapled funds will continue to underperform for an extended period of time. This ignores the positive impact the performance test will have in requiring dud funds to shape up or lose access to customers,” says Mr O’Halloran.
“The proposed Your Future, Your Super laws will help consumers, but can be made even stronger. The law currently leaves core obligations to the regulations and doesn’t apply scrutiny to administration fees and some super products.”
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