The government has introduced the contentious Your Future, Your Super legislation into Parliament, which an industry body has calculated will save consumers up to $1.8 billion in fees during its first three years of implementation.
The estimate has come from analysis by the Financial Services Council (FSC), which has broadly supported the changes with the exception of the proposed performance benchmarks.
FSC chief executive Sally Loane referred to the recent hullabaloo around the super guarantee rate, which the Morrison government has signalled it will freeze instead of commencing its scheduled increase to 10 per cent in July.
“The super industry can only justify calls to increase the super guarantee to 12 per cent if the system becomes more efficient,” Ms Loane said.
The Your Future, Your Super legislation was introduced into Parliament on Tuesday and is scheduled to commence from July.
The reforms include account stapling, a comparison tool for consumers, consequences for funds that fall under a performance benchmark and stricter expense disclosure obligations.
The government has forecast the reforms will save super fund members $17.9 billion over 10 years, improving on the current $30 billion they’re charged annually.
But the FSC has expressed concerns around the design of the new benchmarking methodology – although it hasn’t altogether written off the measure.
“To be clear, the FSC supports weeding out underperforming funds. Duds need to go, we don’t care if they are run by a profit-making company or a trade union and employer group,” Ms Loane said.
“However, we want to see some changes to the design of performance benchmarks. The custodians of our superannuation system are responsible for investing $3 trillion in savings and small changes in trustee decision-making can have major ramifications for the allocation of capital in the Australian economy.
“The FSC is also concerned that while funds have been required to set CPI-linked investment return targets, and have measured themselves against these targets in government mandated dashboards, they will now be retrospectively assessed against a new benchmark.”
The FSC has supported other parts of the reforms, such as higher transparency around expenses and account stapling.
Sarah Simpkins is a journalist at Momentum Media, reporting primarily on banking, financial services and wealth.
Prior to joining the team in 2018, Sarah worked in trade media and produced stories for a current affairs program on community radio.
You can contact her on [email protected].
One of the peak superannuation bodies has claimed that industry funds have “significantly outperformed” their retail counterparts and ca...