25th Jul 2017
FONT SIZE: A+ A-
Federal Government announces super fund law overhaul
Superannuation fund law overhaul

For the first time since 1993, the Federal Government has announced an overhaul of laws governing superannuation funds.

Designed so that ordinary Australians have more control over their superannuation, these reforms will give the regulator, Australian Prudential Regulation Authority (APRA), more power to intervene in the regulation of superannuation funds.

Many Australians are eroding their super balances by paying duplicate or unnecessary fees for life insurance across several funds. The latest reforms will tackle the compulsory need for life insurance within superannuation packages as well as make it easier for consumers to opt out of these products.

The Federal Government expects the reforms to provide consumers with better choices as well as weed out unlawful behaviour in the banking sector.

"There aren't enough protections to ensure that superannuation is being managed in the best interests of members," said Financial Services Minister Kelly O'Dwyer. "The Government is also focussed on making sure that we clean up the scandals that have existed in the banking sector."

What do you think? Is the Federal Government taking the right steps to protect your super balance? Should the overhaul have gone further?

Read more at sbs.com.au
Read more at abc.net.au

RELATED ARTICLES





    COMMENTS

    To make a comment, please register or login
    MICK
    25th Jul 2017
    10:34am
    Sometimes you have to protect people from themselves. Take away this and they will come back at you when they cause their own pain rather than accept responsibility for their actions.
    One thing I have learned over many years is that ordinary people are generally neither capable of managing their own financial affairs or they seek to abdicate this role to others. That is why the woman of the house often takes on the money management role.
    Whilst I applaud weeding out the rorts whereby financial institutions strip money from their customers this needs to be balanced with free choice lest people get what they want and end up like they don't want. Decisions, decisions!
    Old Man
    25th Jul 2017
    11:28am
    I agree MICK, I had training in the financial sector and I consider myself to be quite knowledgeable in some areas of finance, mainly lending and investment. I have a financial adviser because I was never trained in that specific area which is a bit more complicated than being able to read a bank statement or fill out a loan application.

    What is worrying about this projected long overdue overhaul is who will be conducting the review and who will that group be calling on to seek advice into what is to be put in and what is to be left out. Sure, the average punter may not be able to write the legislation but gathering thoughts from people who have a direct experience with problems could be important. Methinks it may finish up with the fox in charge of the henhouse.
    Rosret
    25th Jul 2017
    3:07pm
    I agree Old Man and Mick - it seems very sus.
    Tib
    25th Jul 2017
    7:28pm
    I agree with most of your comment except the bit about women accepting the money management role. Unless This is the reason why so many families have an empty bank account and a full bank
    Card.
    Eddy
    26th Jul 2017
    8:19am
    Disagree Mick with your 'protect people from themselves' criticism. Our statute books are full of laws and regulations to protect people, not just from themselves but also from the predatory behaviour of others. Why should the regulation of financial assets (including superannuation) be any different to other areas of life. The concept of 'free choice' may seem tantalizing but we are not a free choice society, our lives are highly regulated and in that we have no choice but to comply or be sanctioned.
    Old Geezer
    25th Jul 2017
    11:08am
    Let's face it it was a con by insurance companies to bundle life insurance with super in the first place. This should never have been allowed to happen.
    Rae
    25th Jul 2017
    12:50pm
    Yes Og. In at least two cases I know of the life insurance wasn't paid to the widow.
    Old Man
    25th Jul 2017
    11:21am
    I was working as a casual with various companies for a time and was forced to accept their choice of superannuation companies. All of them had the default position of compulsory life insurance which meant, at one stage, that I had five different super funds, all deducting a life insurance policy which I didn't want or need. In each case, I asked for a cancellation and a refund of payment and, in each case, met stubborn resistance. I had to contact the regulator, ISC, to get satisfaction.

    I might point out that in three of the cases, I had completed the application form and had crossed out the life policy default acceptance and in the other two cases, an employer had submitted the forms on my behalf. My recommendation to those who are conducting the overhaul is to make life insurance as a choice, not as a compulsory add-on.
    MICK
    25th Jul 2017
    8:43pm
    You know the top end of society works as a team don't you? Many people believe that the connections are not there but they are. Once you start to understand the relationship between business and government and see the tentacles filter down you sort of get the feeling that some things which happen are no coincidence.
    I know.........conspiracy theory. Seek and ye shall find!
    jackie
    25th Jul 2017
    11:32am
    The insurance part of Super is a blatant rip-off when you're an employer is paying it for you. I woke up to this several years back and sent a letter to my Super fund to cancel it. Most Super fund investments are eroded away by Super fees and Government taxes. I have no idea why the Government has to tax Super funds every year when most people can't get their hands on it for years to come. Interesting that the Government can't wait till the investor retires. I wonder where the money from Super the Government makes goes?
    Rae
    25th Jul 2017
    12:53pm
    Yes exactly. Outside super you do pay capital gain or income tax but also pick up capital losses that can be carried over. This 15% going in and 15% in there is a bit of a wasted cost to low income earners.
    4b2
    25th Jul 2017
    12:19pm
    The overhaul needs to go much further.
    1) Enforce the requirement for employer contributions to be made with each salary/pay period.
    2) Enforce the requirement for the annual increase by employers and stop the Government of the day from stopping the increses.
    Rae
    25th Jul 2017
    12:56pm
    I disagree. Except for higher income earners it is a huge cost to lower paid to have larger portions of wages locked away for decades when they need the money to support themselves and children right now.

    Employers do not pay super for you out of their profits it is a portion of your wage that is paid over on your behalf.
    Trees
    25th Jul 2017
    3:21pm
    If the compulsory super contribution percentage goes up, an employees hourly rate does not go down, the employer pays the higher percentage & that extra cost comes off the bottom line, the companies profit.

    Too much extra time would be required for Admin staff to pay super contributions with each salary/pay period as much as I would prefer that to happen its not practical.
    MICK
    25th Jul 2017
    8:47pm
    One of the most important changes should be for employers to put entitlements into an account other than their own. Specifically a regulator sponsored account. That way if an employee phones then and says their employer has not made such payment the poo can.should hit the fan after a couple of weeks rather than after a couple of years.
    In the end it's about crooks and don't be fooled into believing that business people are not crooks. Many will get away with anything they can, especially the known crooked industries like construction.
    KSS
    25th Jul 2017
    12:24pm
    I would suggest that most people have absolutely no interest in their super at least until retirement is on the horizon. That is why they are left in the default position of the fund (including industry funds) and have no idea where their money is being invested even at the most cursory level, or what fees and charges they are paying. It is about now that all funds are sending out the annual statements and performance reviews but how many people will actually read those statements, understand them and take any necessary action? I would suggest the vast minority. But then later they will blame everyone except themselves when they have less in super than they expected. This will not change no matter how many legislative 'protections' are put in place.
    Old Geezer
    25th Jul 2017
    12:36pm
    I wonder how many check the return on their statements against the published returns of their fund? Most would find a big difference between the two if they did.
    Rae
    25th Jul 2017
    1:00pm
    I insisted my fund give me the returns for the past few decades as they did not publish them through the 70s and 80s. Surprisingly the fund made 3% a year for almost all of the 80s. How the hell do you do that? Never any questions asked either but then the union reps ended up on the Super boards at $200 000 salary a year.

    Not surprising I'm a dedicated cynic.
    Anonymous
    25th Jul 2017
    3:47pm
    Rae - what investment option did you choose

    You only have yourself to blame for not actively managing your portfolio
    Old Geezer
    25th Jul 2017
    6:22pm
    Raphael a lot of people just take NOTICE OF the returns stated on their statement paperwork but never check that they are actually getting those returns on their statement.

    Surely if your balance has increase by very little and it said you are getting 10% something is very wrong indeed.
    Captain
    26th Jul 2017
    11:20am
    As I have said before, finance needs to be taught in school, beginning in primary classes. However you are correct KSS, too many have no interest until close to retirement. Why it hits the fan they wonder what happened.

    To those who took no notice, I have little sympathy. To those who don't understand and do not bother to learn, I also have little sympathy. To those who were ripped off by unscrupulous employers and fund managers, I have some sympathy. However early education would eliminate some of the current apathy and "don't know or understand".
    Rae
    27th Jul 2017
    8:52am
    I didn't have the luxury of any choice. Superannuation was compulsory and there was only the one fund available. Well before 1992. But as I said I also saved and invested from business ventures outside super. Both can be good avenues of wealth generation.

    The investments outside gained me far greater freedom at an earlier age than super. Both have a place in my opinion.

    Of course the choices available today are useful if people learn how to use them.
    Not a Bludger
    25th Jul 2017
    12:28pm
    And, don't forget that thug unions continue to force employers (and employees) to pay super contributions into the union preferred (read union controlled) industry fund - and then get a kickback from both the super fund and insurer - this on top of the board/directors fees paid to their mates.
    Rae
    25th Jul 2017
    1:02pm
    Yes and when that Fair and Sustainable Legislation slammed into self funded retirees those same unions washed their hands of the problem and injustice of it.
    Tib
    25th Jul 2017
    7:34pm
    Industry funds are the best funds available , low fees and returns equal or better than the commercial funds. Considering some of the charges by some of the commercial funds , be prepared to live on dog food in retirement.
    Retired Knowall
    25th Jul 2017
    1:15pm
    Great move, but needs to go much further. Must start with our education system to educate our young ones on the mechanics of our financial system. Will be difficult at first because our one subject wonder teachers are totally ignorant of the subject.
    Old Geezer
    25th Jul 2017
    1:18pm
    Super as we know it has had it's day and anyone under 40 would be mad to put in any more than they are required to.
    Rosret
    25th Jul 2017
    3:18pm
    Retired Knowall school does teach children about superannuation etc etc. However they teach the investors and bank executives at the same time.
    So you will get a loan at compounded debt p.m. but your compounded investment will only be on the principal as they channel interest off to an ancillary account and it will probably only be compounded 6 monthly.
    You could loan your own money out and receive true compounded interest but could you handle the risk of non payment and defaults.
    The advice to my children, as OG points out, put the minimum in super and start your own investment portfolio.
    Trees
    25th Jul 2017
    3:32pm
    Seriously? the education system does cover some aspects of super/investment/banking etc. maybe you are just a little out of touch Retired Knowall with the system? Don't bad mouth all teachers many are dedicated to our children's learning & picking up the slack from crap parenting - but this is way off subject
    Anonymous
    25th Jul 2017
    3:50pm
    OG - please explain

    How can investing in a good mix of assets in a low tax environment (including pre tax savings) not be a great investment vehicle
    Old Geezer
    25th Jul 2017
    3:56pm
    Super is in the sights of the governments and what better way to fund OAPs then nationalise super. That is anything left after you die will be pooled and given to others in retirement with you having no say in it.
    Anonymous
    25th Jul 2017
    4:18pm
    Oh Ok - so youre speculating

    Well you're wrong son

    Anyway ignoring your crystal ball, its a pretty damn fine investment

    I would maximise super investment all the way - silly not to do so otherwise
    Government can change tax tules too. Eliminate negative gearing or take away CGT concessions
    You cannot make investment decisions based on what governments might or might not do 30 years from now - its plain silly
    Retired Knowall
    25th Jul 2017
    5:07pm
    You can FAIL the HSC and still get accepted into a teaching degree.
    If Financial Management is taught in school, why is Gen Y so hopeless in managing their finances?
    Retired Knowall
    25th Jul 2017
    5:09pm
    Reminds of a truism, "Those that can...DO. Those that can't ....Teach.
    Old Geezer
    25th Jul 2017
    5:47pm
    Gee I'd rather take my chances on government eliminating negative gearing and Capital gains concessions than put all my eggs in super with all the rules and regulations constantly changing. Changing negative gearing and CGT concessions will strifle investment in this country with many looking overseas for investment instead.

    Agree it is actually easier to teach than it is to do most things yourself.
    Anonymous
    25th Jul 2017
    6:06pm
    Also a lot easier for some to talk through their backsides , so it seems
    Old Geezer
    25th Jul 2017
    6:18pm
    Why put your money in super if it is already tax free in your own name? I always tell people to have enough funds outside super to earn enough income to take advantage of their tax free threshold and leave the excess in super.
    Anonymous
    25th Jul 2017
    6:33pm
    Nice backdown OG
    of course the first $18k is tax free so it makes no sense to have the income generating principle in accumulation phase if you have no other income and will max out the pensionable pot

    But other factors come into play while you are working and are at a high tax bracket. you should still max your super and negative gear your out of super investments (within reason)

    But you said - you would advise anyone under 40 to put in the minimum - that's just plain stupid
    Anonymous
    25th Jul 2017
    6:33pm
    PS - me thinks youre a simpleton OG - empty vessel
    Old Geezer
    25th Jul 2017
    7:02pm
    Nope my tax free amount is about $30K from memory and a normal person has to earn about $21K before they pay tax.

    Yes that's right anyone under 40 should be investing elsewhere other than in super as it gives them more options instead of having their money locked away for years and at the whim of future governments.

    Not paying tax In itself is not a good investment.
    Old Geezer
    25th Jul 2017
    7:04pm
    I had very little in super when I retired but it has grown many times over since then.
    Tib
    25th Jul 2017
    7:44pm
    I agree with you Raphael but I think your wasting your breath.
    MICK
    25th Jul 2017
    8:54pm
    I suspect you are the simpleton Raphael.
    If you think your money and your assets are YOURS then you are a fool. Ask the citizens of Cyprus. Their money was thieved from their bank accounts by their own government.
    You also need to do some thinking about the digitisation of money. Whilst governments will sell the benefits to the dumb public they won't tell you that they can freeze YOUR money at the click of a computer keyboard. Nor do they tell you they can create negative interest rates (already happening!) and slowly deplete your money with nothing you can do about it. I'm sure even more atrocities will be perpetrated on citizens but we'll have to wait and see.
    Before you call Geezer a simpleton start to think beyond the square. It's all in motion. I'd give it 5 to 10 years.
    Old Geezer
    25th Jul 2017
    8:55pm
    As with everything else when the masses start to believe it is a good idea is when it all comes unstuck. That is why we have booms and busts.
    Anonymous
    26th Jul 2017
    12:29am
    I'll be here in 10 years to rub your nose in it Mick
    Rae
    26th Jul 2017
    7:41am
    It's just under $33000 before tax OG and I like the ability to move within 24 hours and to take profits and rebalance at whim. I also have no age rules nor withdrawal rules whatever and if the government ever decide to try to control direct markets then good luck with that.

    It is going to get pretty dicey I suspect when those holding direct property and fixed interest inside SMSFs slam up against the bottoming of the property cycle and still have to draw down 4+%. but then what would I know.
    Old Geezer
    26th Jul 2017
    10:18am
    That's good Rae I'll pay a little less tax. I haven't done my tax return for the year yet but I balanced the books assuming it was about $30,000.

    Agree Rae as I too could access all my super quite quickly too. FWIW I hold more cash today than I have ever done as the reward risk ratio is not where I like to invest at present. That low VIX has me a little concerned too.
    Rae
    26th Jul 2017
    6:27pm
    Yes OG I agree. It's looking a bit toppy. I've taken some profits off into cash as well. Can't hurt.
    floss
    25th Jul 2017
    2:17pm
    Are they heading off a Royal Commission with this reform .I would not trust this Government to rein in the big end of town with any watered down reform.Just look at the great water robbery on the Darling river covered up by the N.S.W. Government .
    Rosret
    25th Jul 2017
    3:05pm
    People want two different super funds to double their insurance payout in the event of an untoward situation. I can't see what the issue is from the governments perspective.
    To me its like not putting all your eggs in one basket. Look how many people have been caught out by a super fund that has gone belly up. I think most individuals have weighed up the benefits of having two superfunds and made their own choice.
    So why is the government really wanting to change this rule? Is it more difficult to assess their plethora of rules and regulations if we diversify our funds?
    Rae
    25th Jul 2017
    3:12pm
    Are you legally allowed to claim two sets of life insurance?
    Rosret
    25th Jul 2017
    3:21pm
    Don't know Rae but that is what the firm I worked for did. I would have to find the spouse of someone who is deceased to find out whether they both paid out but surely you can have as many life insurance policies as you like??
    Anonymous
    25th Jul 2017
    3:51pm
    Rosret - its fine if you want it. But shouldnt be compuslory

    Did you read the article ?
    Tib
    25th Jul 2017
    9:37pm
    If you want a life insurance you don't need to be in superannuation. You just have to buy life insurance. If you are in two superannuation funds you have to pay two lots of management fees which erode your payout at retirement. Which is why all financial advisors tell you to put all your super in one fund.
    floss
    25th Jul 2017
    6:20pm
    What planet are you on Not a Bludger, not this one I think but keep taking your pills.
    Old Geezer
    25th Jul 2017
    6:25pm
    Unfortunately there is merit in what he says.
    Tib
    25th Jul 2017
    7:47pm
    Maybe he will share his pills with old Geezer.
    David
    25th Jul 2017
    8:10pm
    What annoys me is that some (industry) superannuation funds make huge donations to unions. It is NOT their money to give away! They should be tasked only to make the monies they hold to grow for the sole benefit of their members.
    MICK
    25th Jul 2017
    8:59pm
    What annoys me is that many big businesses and multinationals make contributions to the coalition. Some are alleged to be funnelled in such a way that they are not traceable. What annoys me even more is that the current government is avoiding going after multinationals for OUR tax dollars, giving the already rich tax cuts they have no need of and increasing taxes for ordinary Australians.

    Now that we have both stated what annoys us lets have a discussion about corruption and who is in bed with whom.
    Sorry, I get carried away when people post BS.
    Anonymous
    26th Jul 2017
    1:27am
    Really Mick
    What about union support for labor
    You are so full of bull dust
    Sad deluded individual

    You post more BS than most old boy
    ex PS
    27th Jul 2017
    10:35am
    I have never heard of any Super Funds making donations to anything, they are there to make money for the investors and any would imagine any Board that made a suggestion to start would be sacked on the spot.
    Unions support Labor, Industry supports the LNP, nothing new there, I would be surprised if it was any different considering the Parties were set up to support those particular groups.
    The biggest mistakes are made by voters who have not got the common sense or imagination to change their voting habits for their own benefit. Who you voted for as a worker may or may not be the ones who will take care of your needs as a retiree.
    Old Geezer
    27th Jul 2017
    1:40pm
    Just ask yourself this question. Where do the fees go?
    ex PS
    28th Jul 2017
    5:09pm
    Just ask yourself this question, where does the money come from to pay the Super Fund staff, they are not allowed to accept commissions or recommend individual stock or companies to invest in. Answer this and you will have the answer to your question. I would have thought a man of your self proclaimed knowledge would know this very basic fact about Super Schemes.
    Pamiea
    25th Jul 2017
    11:07pm
    Insurance is worth paying. I opted out at age around 60 and found myself jobless at 62. If I hadnt opted out of insurance I could have used the insurance to fet thru
    niemakawa
    26th Jul 2017
    12:30am
    "Designed so that ordinary Australians have more control over their superannuation, these reforms will give the regulator, Australian Prudential Regulation Authority (APRA), more power to intervene in the regulation of superannuation funds."

    Says it all really, The last thing any Government wants is for ordinary Australians to control their own money.
    Rae
    26th Jul 2017
    7:56am
    The government controls the rules around super and can change them at whim. It really only applied to PAYG workers. They were never going to be able to force the wealth creators into this type of investment risk. Yes A scheme that operates at the whim of political parties holds huge sovereign risk as OG has pointed out.

    As well as the risk of market corrections and employer fraud.

    I tell my young to invest outside super as well as inside for added diversification and freedom to use funds at any time.

    Imagine a new rule change that locks your money away until 70.

    You'd be glad to have a portfolio outside that you could access.
    Rae
    26th Jul 2017
    8:19am
    Big change missed recently was the ' deeming' of super amounts.

    Not satisfied with just making it up for Centrelink incomes and assets they now make up lump sums amounts too. Shades of Monty Python right there in my opinion.
    Old Geezer
    26th Jul 2017
    10:20am
    Agree that deeming is also affecting those with low incomes but lots of assets and their access to the health care card too.
    ex PS
    27th Jul 2017
    10:39am
    Rae, I missed the changes to deeming lump sum amounts. How the hell would that work?
    Old Geezer
    27th Jul 2017
    1:39pm
    Instead of what your super funds actually earns they deem how much it's earns on the balance in your super fund. For some people it is good for others not so.
    Rae
    28th Jul 2017
    12:32pm
    They take the annual income being paid and deem the lump sum as being 16X that amount. Obviously for some sorting of the $1.6 mil allowable in pension mode.

    It is all a bit airy fairy make believe.

    Glad most of my savings and income is in my own hands away from the Super vehicle.

    Of course if avoiding tax is more important that making money then super is great so far. Except for those low paid workers paying increased taxes at 15%.
    ex PS
    28th Jul 2017
    5:16pm
    Apologies for being thick about this, but why is it not deemed at the same rate as any other funds at your disposal ? How the hell can they deem an annual income on a Super balance when they don't know how long it will have to last the recipient?
    I may have to take my balance out tax free and hide it under the bed. Maybe take a few cruises and get a pension.
    niemakawa
    28th Jul 2017
    5:36pm
    ex PS you would be wise to take it when you can. The future for Superannuation is looking very bleak. The Government, regardless whether that be Lib/Lab/Green have intentions to raid all the Super. funds in the not too distant future, especially those funds that belong to over 65s. Sounds far fetched? I do not think so given their track records.
    ex PS
    29th Jul 2017
    4:51pm
    Yes N, I am keeping an eye on government changes to Super on all sides and and getting close to pulling the pin. Currently my Super fund is doing well if compared to my self managed fund so I am tempted to leave it in for a bit longer.
    Politicians of all flavors have one thing in common, they can't keep their hands of other peoples money.
    I have taken out the tax free before 60 component of my Super and added that to the money obtained from asset sales and now have a 50/50 split between Super and self managed funds, so to a certain extent I have a safety net.
    As far as being far fetched is concerned, there is no such thing when dealing with governments.


    Join YOURLifeChoices, it’s free

    • Receive our daily enewsletter
    • Enter competitions
    • Comment on articles