Several months and a Federal Election have passed since Henry Cooper delivered his long-awaited report on superannuation. Yesterday the Minister for Superannuation, Bill Shorten, announced that the Federal Government would accept 139 of the 177 recommendations. How will this affect you?
The key intention of the review was to make superannuation more affordable and easy to understand, and therefore more accessible to all Australians. The Government have responded to the need for a low-cost, low frills superannuation product by endorsing the suggested MySuper, which, if passed, will be available from July 2013.
MySuper will offer a simple, value for money superannuation products which will not allow commissions to retail funds and will be bound by new standards for the payment of performance fees to fund managers. There will be no entry fees charged to new members and exit fees will be limited to recovery of costs incurred by the fund.
To ensure standards and regulations are the same across the industry, the Australian Prudential Regulation Authority (APRA) will have the power to issue such standards. The Australian Securities and Investments Commission (ASIC) and the Australian Taxation Office (ATO) will also have a better oversight of how providers are performing.
The streamlining of the superannuation industry provides the groundwork for moving the superannuation guarantee levy from 9 per cent to 12 per cent. Part of the streamlining is to make everyday transactions faster, cheaper and easier. The projected reduction in fees is 40 per cent, meaning money paid into your superannuation will work better for you and will result in a projected $60 billion extra for Australian savings by 2035.