Superannuation minister Jane Hume wants Australians to be more engaged with their super and to use their savings “more efficiently” when they enter retirement.
Senator Hume believes the super system’s bones are “solid and stable” but less than perfect.
“The complexity of the system and the lack of simple, clear and independent information is holding Australians back from finding the best product for their circumstances,” she told the financial services industry in an event hosted by Pritchard Partners.
Senator Hume also says retirement savings should be used in a better way, adding that Australians are retiring richer than ever yet live extraordinarily frugal lives in retirement.
“The challenge for policymakers is to help retirees use their savings more efficiently and enjoy a much better standard of living,” she said.
She said more retirees should draw down on their super capital instead of living only off investment returns and passing away with most of their retirement savings intact.
The senator also claimed that COVID-19 led to more consumer engagement with super which, in turn, forced many to reassess their finances.
“The early release of superannuation was a lifeline for Australians that got them through to the other side of the worst of the economic consequences of the pandemic,” she said.
A raft of government super reforms aimed at improving systems and protecting members’ best outcomes would be rolled out this year, the senator announced.
The reforms would put underperforming funds on notice, she said. The government’s Your Future, Your Super reform would require funds that fail an annual quality test to inform members of underperformance and prevent them from taking on new members until their issues are fixed.
“Of all our reforms, this is a welcome outcome. There is a proliferation of funds and some of them remain hidden in the shadow of the good performers,” said Senator Hume.
Other reforms should see an end to unnecessary super and insurance products, the strengthening of anti-hawking provisions, and a stronger line on deducting advice fees from super accounts.
“We have legislation before Parliament that, as of 1 July 2021, we now have fees for one-off financial advice which can only be deducted out of MySuper accounts, increasing the visibility of advice fees for members and improving transparency,” said Senator Hume.
“These have capped fees along with data matching technology within the ATO; to reunite lost, inactive accounts, low balance accounts with their rightful owner.
“As of December 2020, reforms have resulted in the ATO reuniting and consolidating around $3.7 billion held in unattended multiple accounts, on behalf of 2 million people.”
Are you happy with your super fund? What do you think of the senator’s suggestions?
If you enjoy our content, don’t keep it to yourself. Share our free eNews with your friends and encourage them to sign up.