About 80% of Australians do not know about an important change to super that could see them tied to a fund for life from today, being stuck in a poor fund could cost workers up to $230,000
Millions of workers will be 'stapled' to their current super fund, which means unless they choose otherwise the super fund they have now will stick with them from job-to-job.
A UMR survey of 1,120 respondents found that just 20% knew about the changes or what could happen to them if they don't choose a fund. A further 42% had a vague understanding that super was changing but did not know what the reforms are and 38% did not know there were changes afoot.
And 70% did not know what the term 'stapling' meant in relation to superannuation.
The low-level of community awareness of today's super changes are concerning as they have the potential to significantly impact workers' retirement savings, Industry Super Australia (ISA) analysis shows being 'stapled' to a poor-performing product could cost as much as $230,000 at retirement.
ISA is urging all Australians to check their super and make sure they are in a good fund with solid long-term performance and low fees. Even small changes in investment returns can add up to significantly more money at retirement.
The government is also poised to staple more than 1 million Australians to a super fund that failed its performance test. Unless these workers choose otherwise the government will be tying them to a super product it has already marked as inferior.
Millions more could be unknowingly condemned to being stapled to a dud fund. Half of all super funds have not been tested, which includes some of the worst performing products with the highest fees.
While the stapling reform is a positive step that stops the future proliferation of unintended multiple accounts it needs to be linked to the government's new performance test.
Industry Super Australia pushed the government to amend its Your Future, Your Super package – which came into law in June – so that workers can only be stapled to funds that pass the performance test.
A whopping 70% of Australians said the government should only allow workers to be stapled to funds that have passed the performance test. It's time the government acted to protect workers savings.
Comments attributable to Industry Super Australia chief executive Bernie Dean:
"Most people don't know that government changes to super laws will see them stuck to their current fund, which could leave many stapled to a dud that hasn't passed the government's own performance test."
"Being stuck to a dud fund could punch a huge hole in a person's nest egg, and that is going to limit how much they enjoy life in retirement – people should make sure they are with a good fund."
"Given the risks to so many people's livelihoods the government needs to tighten up protections to make sure people are only stapled to the best funds that have passed the performance tests."
