The Your Future, Your Super reforms are “headed in the right direction” but the government needs to close loopholes to keep underperforming funds from sticking around.
Industry Super Australia chief Bernie Dean has welcomed the changes to superannuation, but warned that they need to take account of more than just investment fees to deliver savings to Australians.
“The reforms at present will allow the duds to keep fee gouging as their administration fees and other hidden charges are exempt from the tests,” Mr Dean said.
“Excluding any type of fees from such an important test would be a big mistake. The only measure that matters to what Australians have at retirement is what members get into their account – that is investment returns, minus fees, costs and charges anything else is illogical.”
Mr Dean also voiced concerned that a “loophole” would allow underperforming funds to “slip through the net” and that the government should be looking at removing dud funds from the system.
“The government’s proposal is to ban funds that repeatedly fail the tests from taking in new members, but it does little to get members out of those funds,” Mr Dean said.
“We need to do better than that. The government is headed in the right direction and with some refinements to their proposals, Australians’ savings will have stronger protections.”
The case of administration fees has been a sticking point for opponents of the reforms, with shadow finance minister Stephen Jones seizing on statements made by backbencher Andrew Bragg to suggest that superannuation minister Jane Hume had refused to back the “flawed” customer charge benchmarks.
“It is vital administration fees are made transparent to super fund members in any measurement of their funds’ performance,” Mr Jones said.
“Labor warned the government its failure to do so was a major design flaw in its plans. Senator Bragg knows this is true. If Assistant Minister Hume won’t consult with Labor or the industry to fix her botched budget announcement, she should at least take advice from her backbench colleague.”
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