The federal government introduced the Treasury Laws Amendment (Protecting Your Superannuation Savings Package) Bill 2018 into Parliament today.
The new laws include a range of reforms that will protect against the undue erosion of superannuation through excessive fees and inappropriate insurance arrangements.
The reforms will also provide the ATO with the ability to proactively reunite Australians with their low-balance, inactive accounts.
The bill prevents trustees of super funds from charging administration and investment fees exceeding 3 per cent a year of the balance of accounts below $6000.
Revenue and Financial Services Minister Kelly O’Dwyer said this will address the consequences of opposition leader Bill Shorten’s decision as the then-superannuation minister to remove protections for low-balance accounts in 2013.
The government’s changes also prevent trustees from charging exit fees when members close or roll over their super accounts, no matter their balance, removing a disincentive to super fund members consolidating and closing unwanted accounts.
Also under this bill, fund trustees will be required to provide insurance on an opt-in basis only to new members aged under 25, members with account balances below $6000 and members with inactive accounts, unless a member has directed otherwise.
This will better target default insurance cover and prevent inappropriate erosion of retirement savings by insurance premiums for cover members do not know they have, that goes beyond what they need, or which they cannot even claim on.
Also, accounts below $6000 will be protected from fees and charges by requiring them to be transferred to the Commissioner of Taxation if they have been inactive for a continuous period of 13 months.
The government will empower the commissioner to then proactively pay these amounts, plus those lost accounts already held by the ATO, into the rightful owner’s active super account.
“This package of reforms is further proof that the Turnbull government is committed to a superannuation framework that supports the retirement savings of all Australians,” O’Dwyer said.
“It adds to earlier legislation introduced into the Parliament by the Turnbull government to improve fund governance, transparency and accountability to members, and to provide greater powers to the regulator to better protect members and their money.
“After all, your superannuation is your money.”