The Federal Senate will this week consider the controversial amendment to the Superannuation Industry (Supervision) Act 1993 first proposed by the then-Treasurer Scott Morrison in this year’s Budget, aimed to stop fees eating away low balance accounts.
The reforms, if passed, would see superannuation funds restricted in charging fees on low balance accounts and prevented from charging insurance premiums to members under 25 years, with balances under $6,000 or with inactive accounts without their permission.
Despite the industry backlash on the reforms, financial advisory firm Dixon Advisory believed that many Australians would benefit from the amendment passing.
“Currently, there are no protections in place for low balance superannuation funds, and they continue to be diminished by fees and insurance premiums. This not only helps young people but also women who have low balances from time out of the workforce and older Australians who have taken on casual or part-time work after retirement,” Dixon’s head of advice, Nerida Cole, said.
“As life expectancy grows, our ageing population means more Australians than ever are under pressure to achieve financial security in retirement – it’s one of the biggest challenges we now face as a nation.
“Without this change, it is harder for people to accumulate long-term savings and it can also act as a disincentive to saving.”
Many Australian worked part-time or casually and there were more than 10 million unintended multiple super accounts. Cole warned that multiple insurance policies held across accounts could erode each one by 10 per cent or more, “destroying any chance of retiring in comfort”.