The federal government has backed down on its controversial plan to allow the treasurer to have the power to veto investments made by super funds in order to get its Your Super, Your Future legislation to pass through the House of Representatives.
As YourLifeChoices reported last week, crossbench MPs had spoken out publicly against the provisions included in the legislation, meaning that it was unlikely to pass without significant changes.
With the controversial provision removed, the legislation passed through the House of Representatives late on Thursday afternoon, but there is still some disquiet about other provisions in the bill, particularly with regard to the stapling of super funds.
The bill still faces an uphill battle to pass through the Senate in its current form.
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The Australian Institute of Superannuation Trustees (AIST) welcomes the removal of the ‘investment kill switch’ provision.
However, the superannuation advocacy group said it was still hopeful the Senate would block the legislation as it still contained flawed measures that would directly harm super members and threaten the retirement outcomes of millions of Australian workers.
AIST chief executive Eva Scheerlinck said that she remained deeply concerned that vulnerable Australians would be stapled to underperforming and untested super products if the legislation made it through the Senate.
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One of the key concerns with the legislation is that there is no requirement for all super funds to be tested or for a fund to have passed a test before a member can be stapled to it.
“The amendments to the bill don’t change the fact that this piece of legislation contains fatal flaws that will result in significant unintended member detriment,” Ms Scheerlinck said.
“This bill excludes more than one-third of super savings from scrutiny and disclosure, and does not prevent members from being stapled to funds that have not been tested or have failed the test.”
Super Consumers Australia was vocal in calling for the investment veto measure to be dumped, with director Xavier O’Halloran welcoming the move to remove it.
Mr O’Halloran said he believed that the legislation now offered significant benefits to consumers and it should not take much effort iron out the remaining kinks.
“The Senate now has the future of Australians’ super in their hands,” Mr O’Halloran said. “They will be responsible for passing game-changing, pro-consumer legislation that will save people hundreds of thousands of dollars.
“We’re glad to see the ministerial power go. Now we can focus on measures which will bring us closer to ensuring everyone has a single high-performing super fund.
“There are some remaining issues with the legislation to be fixed, but the government and opposition are not that far apart on many of these outstanding points. They both agree that it is time to end the delay and get on with putting underperforming super funds’ feet to the fire.
“We are calling on all parliamentarians to find common ground and get this done,” Mr O’Halloran said.
“Further delay will lead to more multiple accounts, and people being subject to poor returns.
“The Productivity Commission was scathing of funds for these issues three years ago, and the tail of underperformers hasn’t disappeared.
“Solving this problem will see a saving of $188,000 for the four million people unlucky enough to find themselves in an underperforming fund.”
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