Retirement
Government passes controversial superannuation reforms
The controversial Your Future, Your Super legislation has passed the Senate and will come into effect from 1 July 2021, with critics warning that members could be $230,000 worse off under the changes.
Government passes controversial superannuation reforms
The controversial Your Future, Your Super legislation has passed the Senate and will come into effect from 1 July 2021, with critics warning that members could be $230,000 worse off under the changes.
The Your Future, Your Super has passed after receiving support from the crossbench, including senator Pauline Hanson.
The Labor Party, which strongly opposed the bill, accused the Liberal Party of meddling with superannuation on ideology, instead of putting the interests of ordinary people at heart.
The bill failed to pass on the first try, with the Liberal Party voting against its own bill, allowing for Ms Hanson’s amendments to make it through. One of the amendments was to increase the concessional contribution cap for workers aged 67 and over.
“I don’t know if this has ever happened before, when the government voted against the progress against its own bills to allow Senator Hanson to pass her own bill,” Senator Nick McKim said.
The government’s contentious veto power over super fund investment decisions was previously removed.
Critics say members will be worse off
Over the course of the year, the government has argued in support of one of the key aims of the legislation, which is to avoid the fee drain that occurs when workers, often unknowingly, open accounts with each new employer. This has now been reversed with the legislation foreseeing a lifelong relationship between a fund and a member, under what's being called a "stapling" mechanism, which is set to commence from 1 November 2021.
And while the government has argued this would save consumers $17.2 billion over 10 years, Industry Super Australia (ISA) said the new laws could trap Australians into dud superannuation products, potentially costing millions of workers almost $230,000 in retirement savings.
“Senators that vote to shackle workers to the worst-performing funds will punch a huge hole in the savings of many Australians,” ISA chief executive Bernie Dean said.
“Senators know full well that most people don’t spend a lot of time thinking about super and deserve to be protected from ending up chained to a dud fund.”
A further flaw in the legislation, according to critics, is that more than $500 billion of members’ savings will be shielded from performance tests – including products that bore the brunt of criticism during the banking royal commission.
Under the legislation, funds that fail the test will be required to write to members informing them of their underperformance. The consequence for consecutive failures is new members are barred from joining.
While on the principle it seems to act as a protection for members, the ISA noted that members that do not act on the letters will stay trapped in the inferior product and will have their savings drained.
“The Senate can boost members’ savings and stop them ending up with too many super accounts by simply mandating workers can only be stapled to the best-performing funds,” Mr Dean concluded.
Recent data released by the Australian Prudential Regulation Authority (APRA) revealed that superannuation assets under management surpassed $3 trillion at the end of March.
RELATED ARTICLES
About the author
About the author
Superannuation
Rest super fund reports 11.19 per cent return for 2024
Rest superannuation fund delivered an 11.19 per cent return in its MySuper Growth investment option for calendar year 2024, marking two consecutive years of positive returns. Read more
Superannuation
Actuaries propose three-tier superannuation tax reform
The Actuaries Institute has outlined major reforms to Australia's $4.1 trillion superannuation system, proposing uniform tax rates and new levies on high retirement withdrawals. Read more
Superannuation
Survey reveals Australians' reliance on superannuation for retirement
A new survey by AustralianSuper has found that only 32% of Australians believe they could save for retirement without compulsory superannuation. Read more
Superannuation
AMP launches national campaign to boost super engagement
AMP has unveiled a new national advertising campaign aimed at encouraging Australians to engage more actively with their superannuation. Read more
Superannuation
AustralianSuper urges action on gender pay gap for Equal Pay Day
AustralianSuper, Australia's largest superannuation fund, is calling for increased focus on the gender pay gap and its long-term impacts on women's retirement savings this Equal Pay Day, August 19. Read more
Superannuation
AMP advisers focus on super contributions and home ownership queries
Financial advisers are prioritizing assistance with superannuation contributions, transfer balance caps, death benefits, and home ownership issues, according to recent data from AMP Advice. Read more
Superannuation
Aware Super reports strong 11.02% return for flagship investment option
Aware Super, one of Australia's largest superannuation funds, has announced an 11.02% return for its High Growth accumulation option in the 2024 financial year. Read more
Superannuation
Retirement savings strategies: How to boost your superannuation
Superannuation is a pivotal part of retirement planning in Australia, offering a tax-effective way to save for your later years. As you navigate through your working life, enhancing your ...Read more
Superannuation
Rest super fund reports 11.19 per cent return for 2024
Rest superannuation fund delivered an 11.19 per cent return in its MySuper Growth investment option for calendar year 2024, marking two consecutive years of positive returns. Read more
Superannuation
Actuaries propose three-tier superannuation tax reform
The Actuaries Institute has outlined major reforms to Australia's $4.1 trillion superannuation system, proposing uniform tax rates and new levies on high retirement withdrawals. Read more
Superannuation
Survey reveals Australians' reliance on superannuation for retirement
A new survey by AustralianSuper has found that only 32% of Australians believe they could save for retirement without compulsory superannuation. Read more
Superannuation
AMP launches national campaign to boost super engagement
AMP has unveiled a new national advertising campaign aimed at encouraging Australians to engage more actively with their superannuation. Read more
Superannuation
AustralianSuper urges action on gender pay gap for Equal Pay Day
AustralianSuper, Australia's largest superannuation fund, is calling for increased focus on the gender pay gap and its long-term impacts on women's retirement savings this Equal Pay Day, August 19. Read more
Superannuation
AMP advisers focus on super contributions and home ownership queries
Financial advisers are prioritizing assistance with superannuation contributions, transfer balance caps, death benefits, and home ownership issues, according to recent data from AMP Advice. Read more
Superannuation
Aware Super reports strong 11.02% return for flagship investment option
Aware Super, one of Australia's largest superannuation funds, has announced an 11.02% return for its High Growth accumulation option in the 2024 financial year. Read more
Superannuation
Retirement savings strategies: How to boost your superannuation
Superannuation is a pivotal part of retirement planning in Australia, offering a tax-effective way to save for your later years. As you navigate through your working life, enhancing your ...Read more
