This year’s federal budget was about encouraging us to spend, spend, spend our way out of recession, and creating many needed jobs along the way.
And while you may have heard all about the tax cuts and other giveaways, you may have missed some important changes to your superannuation.
It’s tied up in a package called Your Future, Your Super, which the Government estimate will save us $17.9 billion over the next 10 years.
Wishful thinking some say, but even if they are half right, that would be a good thing.
Here’s the changes.
Your Super Will Follow You To Your Next Job
If you take little interest in your super, you can end up with a new account every time you change jobs.
To stop this, the Government have a plan to ‘staple’ your superannuation fund to you, meaning it sticks with you even if you change jobs, so you don’t unintentionally find yourself with a new one.
Why is this important? To stop the duplication of fees.
One third of us have unintended multiple super accounts costing $2.6Billion annually in unnecessary fees, according to the Productivity Commission.
Bad Super Funds Will Be Named and Shamed
How it will work is that funds will be required to meet a yet-to-be-introduced annual performance test.
And if they fail the test, the super fund will have to let members know they failed the test, and also give them the option of switching their money over to a better-performing fund.
Not much room to hide I'd have thought.
Then, if they keep underperforming, they will be barred from admitting new members until their performance picks back up.
You Can Compare Super Funds More Easily
If you are looking for a better option, doing your research can be tough – there’s plenty of options out there.
To make it easier to find and compare super funds, the Government will make an online comparison tool called "YourSuper" that helps you compare different MySuper products.
Funds Will Have To Be More Transparent
Show me the money!!
The government will introduce legislation that will improve the accountability and transparency of super funds.
Superannuation trustees will have to make sure money is spent only in members’ best interests, and will have to be far more transparent about what they are spending your money on.
Will It Work?
Tackling multiple accounts is a good thing.
Underperforming funds cost people dearly as well, and really make a dent in retirement plans. Anything that can help people find better options is a step in the right direction.
The Productivity Commission believe that fixing these twin problems could benefit members to the tune of $3.8 billion each year. They think even a 55 year old today could gain $79 000 by retirement. A new job entrant today could have $533 000 more when they retire.
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