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Your Future, Your Super introduced to Parliament

Your Future, Your Super introduced to Parliament
Tony Zhang
18 February 2021 — 1 minute read

Treasurer Josh Frydenberg has introduced the Your Future, Your Super reform package to Parliament, but the controversial bill has faced opposition from several major super industry bodies.

The package, if legislated, will introduce an annual performance test and a public ranking by the Tax Office, with funds that fail to pass expected to be banned from accepting new members from July this year. 

According to the Treasury, the Your Future, Your Super reforms make the super system “better for members” in four key ways including preventing the creation of unintended multiple super accounts, helping members choose well-performing products that meet their needs, holding funds to account for underperformance, and increasing transparency and accountability.

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The explanatory memorandum to the bill notes that it “includes amendments to the portfolio holdings disclosure rules, which generally require trustees to publish information about their disclosable investment items on their website. The portfolio holdings disclosure rules currently contain an exemption that allows trustees to choose not to disclose up to 5 per cent of superannuation holdings.”

Together, the Treasury estimates, these changes should save Australians over $17.9 billion over 10 years.

“These measures will reduce waste in the system and save Australian workers $17.9 billion over 10 years by holding underperforming funds to account and strengthening protections around the retirement savings of millions of Australians,” Minister for Superannuation and Financial Services Jane Hume said.

“Australians currently pay $30 billion per year in superannuation fees, while 3 million accounts sit in underperforming funds worth over $100 billion in retirement savings.”

However, according to Industry Super Australia, the Your Future, Your Super reforms will be the government’s “greatest gift” to the big banks and the for-profit super sector by allowing them to “skim” up to $10 billion a year in profit. 

ISA stated its claims are hinged on the package’s apparent disregard for the excessive fees charged by the for-profit sector, among other things.

“We’re disappointed that sensible feedback from across the sector has been ignored to this point and will further examine the concerning regulation-making powers that have been added. Ultimately, we’d like to see the Parliament enact changes that will deliver members more,” said ISA CEO Bernie Dean. 

Meanwhile, AIST CEO Eva Scheerlinck said while AIST supported the intent of the legislation to address underperformance and multiple accounts, the bill stopped well short of addressing underperformance across the super sector and, in doing so, risked consumers being stuck in dud funds under a proposed “stapling” measure.

“If stapling occurs before underperformance is substantially addressed, members who are currently in underperforming funds will be stapled to those funds,” Ms Scheerlinck said.

“This is an extraordinary overreach of power with no precedent in this country.

“This change removes the certainty needed for long-term investing and risks significant impact on investment outcomes for members.”

Your Future, Your Super introduced to Parliament
jane hume new smsf
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