TWO superannuation bills which passed the Senate overnight, with extensive amendments, will help curtail super balances being eroded by unnecessary fees and signal the beginning of the end for underperforming, fee gouging super funds according to Industry Super Australia.
Industry Super Australia deputy chief executive, Matt Linden said after a tortuous eventual vote, one of the most important changes was the automatic consolidation of inactive accounts under $6000 from July 1 this year.
“Although the technology to automatically consolidate accounts has been available for many years without requiring members to do the legwork legislators have dragged the chain," Mr Linden said. “Coupled with fee caps for accounts under $6000 these measures will have to do the heavy lifting to prevent erosion of small account balances.
“It was disappointing explicit changes intended to protect young and low balance members from unnecessary insurance were completely dropped from the final bill."
While additional safeguards were definitely required removing the provisions completely was not necessary, he said.
“Regardless, Industry super funds will strive to ensure default insurance arrangements remain cost effective and matched to the insurance needs of members taking into account age and other factors such as occupational risk," Mr Linden said.
The other Bill passed by the Senate, Member Outcomes 1, benefited significantly from Labor and Green amendments supported by most of the cross bench which will place greater scrutiny on costly and poorly performing, non-default ‘Choice’ superannuation products, Mr Linden claimed.
As a result of the amendments the fees, costs, and returns of choice superannuation products will be scrutinised, and new reporting standards should now shine a light on billions in undisclosed investment fees and profits gouged from the system.
“Trustees who fail to operate in the best interest of fund members will now have little place to hide,” Mr Linden said.
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