Chartered Accountants Australia and New Zealand (CAANZ) has welcomed last night’s federal budget superannuation reforms, which will ensure Australians keep their super fund when they change employer and up-end the default fund regime.
The accounting body said the “unexpectedly significant” Your Future, Your Super package, due to commence on 1 July 2021, would end the long-established policy of allowing the existence of default superannuation funds, which had resulted in the creation of multiple super accounts and unnecessary fees for members.
“This will ultimately lead to employers ceasing to offer a default superannuation fund, which represents a major shift in how the super industry has operated in Australia since the mid-1980s,” CAANZ superannuation leader Tony Negline said.
“This is a complex change that needs to be carefully implemented to ensure that the next generation of Australians will be able to access better super outcomes.”
Negline also highlighted the government’s commitment to implementing an online YourSuper comparison tool in order to provide consumers with greater choice and encourage competition between funds.
“We have long argued that consumers need access to more comprehensive super fund information to help them work out which fund suits them best,” he noted.
“We welcome the announcement that the government will kick-start this by ensuring detailed fund performance and fee data gathered by APRA (Australian Prudential Regulation Authority) is published and regularly updated.”
In addition, he applauded the government’s new measure requiring super funds to meet an annual performance test in an effort to hold poor-performing funds to account.
“Underperformers will also be banned from accepting new members until performance improves, be forced to tell existing members that their fund is not up to scratch and refer them to the YourSuper portal,” he said.
“While it will take some years for these policies to be bedded down and for their longer-term benefits to be clear, the government’s desire to require super funds to be as transparent in their reporting to members as Australian-listed companies are to their shareholders can only lead to better outcomes.”
Following the budget, some technical experts noted a number of the government’s announcements had the potential to boost the appeal of SMSFs and make them more attractive as the preferred retirement savings vehicle to members of other types of superannuation funds.