The Your Future, Your Super legislation has entered Parliament despite accusations that the government “ignored” industry submissions.
The Your Future, Your Super legislation has been savaged by a number of industry bodies who want to see “substantial changes” in order to protect members from being stapled to dud funds.
“The risk of rushing the bills through Parliament without a sufficient evidence base is heightened by the fact that the bills leave much of the detail to regulations, and so it is very difficult for Parliament to evaluate the potential implications of what they are considering,” said Eva Scheerlinck, chief executive of the Australian Institute of Superannuation Trustees (AIST).
The bill appears mostly unchanged since the exposure draft was released in November, save for a handful of alterations in areas such as portfolio disclosure requirements, where Australia has historically lagged. Industry Super Australia (ISA) accused the government of not taking sector feedback seriously, noting that admin fees have still been left out of the performance test.
“We’re disappointed that sensible feedback from across the sector has been ignored to this point and will further examine the concerning regulation making powers that have been added. Ultimately we’d like to see the Parliament enact changes that will deliver members more,” said ISA CEO Bernie Dean.
ISA also warned that new powers – which could allow the government to unilaterally prohibit an investment or payment regardless of whether it is considered to be in the best financial interests of members – could see “extreme elements” of the Coalition government attempt to ban investment in ESG and affordable housing, saying “the regulatory kill switch is unnecessary and an ideological overreach”.
“An added regulation power is equally concerning. It would allow the Minister (sic) to dictate what is in member’s best financial interest – giving politicians unfettered control over workers’ super,” ISA said.
The AIST went further, saying the bill “lacks important detail” and could see any super fund investment or expenditure banned.
“This is an extraordinary overreach of power with no precedent in this country. This change removes the certainty needed for long term investing and risks significant impact on investment outcomes for members,” said Ms Scheerlinck.
The new legislation has yet to be passed by Parliament.
“These measures will reduce waste in the system and save Australian workers $17.9 billion over 10 years by holding underperforming funds to account and strengthening protections around the retirement savings of millions of Australians,” Treasurer Josh Frydenberg said.
“Australians currently pay $30 billion per year in superannuation fees, while 3 million accounts sit in underperforming funds worth over $100 billion in retirement savings.”
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