Final regulations attached to the Your Future, Your Super reforms – which were released last week – indicate funds will be judged on administration fees charged to members in the most recent financial year, rather than an average of the last eight years as per the draft regulations.
Industry fund advocacy body Industry Super Australia slammed what it called a “major backflip” by the government in amending the administration fee benchmarking process within the performance test, which could see underperforming funds barred from taking on new member money if they fail multiple times.
“This not only allows dud super funds to whitewash years of fee gouging, it also gives unscrupulous players free reign to fiddle the books and shift costs to the investment side with little impact on its performance assessment,” Industry Super said.
“Through creative bookkeeping funds could still be charging members the same high fees but sneak through the test. Members would then never be told their fund is an inferior performer.”
“Millions of Australian workers unknowingly stuck in a dud super fund will be the biggest losers from the government’s sneaky backflip on performance tests that were meant to clean them out of the system,” Industry Super chief executive Bernie Dean said.
“Some funds could cook their books to sneak through performance test assessments, resulting in millions of Australians being unaware their super fund is ripping them off and could get a better deal elsewhere. The government needs to reverse its backflip and protect working Australians, not dodgy financial services companies.”
However, AMP Australia CEO Scott Hartley welcomed the regulation change, saying it would better reward funds that had made efforts to drop their fees in recent years and prevent members from relying on “inconsistent” historical fee data.
“The Your Future Your Super legislation will help ensure super funds deliver better outcomes for their members,” Mr Hartley said.
“Using administration fees from the most recent financial year in the calculation of the annual performance assessment is sensible. It will ensure funds can be assessed on the fees that they are presently charging members and acknowledges the inconsistencies in the historical recording of fee data across funds.”
The wealth giant said its view was that “all members should expect their fund to be judged on all of the fees that are charged to them today”.