Bills to boost super

The Federal Government passed two superannuation bills last week designed to stop people’s super being chewed up by excessive fees and charges and will hopefully see the end of under-performing, expensive funds.

Industry Super Australia deputy chief executive Matt Linden was disappointed the two bills were heavily amended but was pleased the bills had finally passed.

He said one of the most important changes was the automatic consolidation of inactive accounts under $6000 from July 1 this year.

‘‘Although the technology to automatically consolidate accounts has been available for many years without requiring members to do the legwork, legislators have dragged the chain,’’ Mr Linden said.

‘‘Coupled with fee caps for accounts under $6000, these measures will have to do the heavy lifting to prevent erosion of small account balances.’’

Mr Linden was disappointed one of the proposed amendments was dropped.

‘‘It was disappointing explicit changes intended to protect young and low balance members from unnecessary insurance were completely dropped from the final bill. While additional safeguards were definitely required removing the provisions completely was not necessary.

‘‘Regardless, Industry super funds will strive to ensure default insurance arrangements remain cost effective and matched to the insurance needs of members taking into account age and other factors such as occupational risk.’’

The bill also stops funds from slapping exit fees on accounts, regardless of the amount.

The other bill that passed through the Senate is designed to allow greater scrutiny of superannuation products, some of which are expensive and perform poorly.

Industry Super Australia expects that many products will be shown to have undisclosed investment fees which means profits are being taken from member’s account.

‘‘Trustees who fail to operate in the best interest of fund members will now have little place to hide,’’ Mr Linden said.