The Turnbull Government has taken action to protect the hard-earned superannuation savings of millions of Australians from rorts and rip-offs.
Today's introduction into the Parliament of the Treasury Laws Amendment (Protecting Your Superannuation Savings Package) Bill 2018 introduces a range of reforms which will protect against the undue erosion of superannuation balances through excessive fees and inappropriate insurance arrangements.
The reforms will also, for the first time, provide the Australian Taxation Office (ATO) with the ability to proactively reunite Australians with their low balance, inactive accounts.
The Bill prevents trustees of superannuation funds from charging administration and investment fees exceeding 3 per cent per year, of the balance of accounts below $6,000. This will address the consequences of Bill Shorten's decision as the then Minister for Superannuation to remove protections for low-balance accounts in 2013.
The Government's changes also prevents trustees from charging exit fees when members close or rollover their superannuation accounts, no matter their balance.
These changes will help to prevent erosion of low balance accounts by high passively-incurred fees, and will remove a disincentive to superannuation fund members consolidating and closing unwanted accounts.
Tailoring insurance arrangements in superannuation
Under this Bill, fund trustees will be required to provide insurance on an opt in basis only to new members aged under 25 years, members with account balances below $6,000, 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.
Importantly, members will still be able to obtain insurance cover within their superannuation if they choose to do so – young, inactive and low balance account holders will still be able to opt in to insurance through superannuation.
These measures address significant issues associated with the current default insurance arrangements in superannuation, which were also put in place in 2013 by then Minister for Superannuation, Bill Shorten.
Reuniting your super
The Bill will also further protect accounts below $6,000 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 superannuation account.
This will increase the rate of account consolidation across the superannuation industry, reduce the number of inactive low‑balance accounts at risk of erosion and reduce insurance premium and fee duplication for many members.
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.
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.