Workers could be the big losers with the Senate passing laws that could trap millions of Australians into dud super products, costing them almost $230,000 from their retirement savings.
The government’s Your Future, Your Super legislation staples millions of members into inferior super products that would either fail new performance tests or are shielded from them altogether.
At least 2.6 million super fund accounts are locked in funds that could fail performance tests – many more workers are in funds that will not be tested.
Industry Super Australia pushed for sensible amendments that would have mandated that Australians can only be stapled to funds that pass the performance test. Without this change the Bill could cost Australian workers up to $230,0001 from their savings.
Instead, the government has given poor super products a leg-up at the cost of the workers they are fleecing with their high-fees and lousy performance.
A further blow to workers is that more than $500 billion of members savings are still shielded from performance tests – including products that were savaged during the Banking Royal Commission.
The performance tests are a vital improvement to the system and ISA will be pushing the government to ensure the funds they carved out – which are some of the worst in the system – are quickly included.
Funds that fail the test are forced to write to members informing them of their underperformance, the consequence for consecutive failure is new members are barred from joining.
After criticism, the government added administration fees to the test and fixed the benchmarks to better reflect fund investment in unlisted assets. Positive moves that will make the tests more robust.
It was also forced to remove extraordinary regulation making powers that would have allowed the Treasurer to determine super fund expenditure and investment – an ideological overreach that even many Coalition MPs opposed.