MySuper passes, ISN welcomes 'flipping' ban
The Government's MySuper Bill passed through the House of Representatives yesterday, and the Industry Super Network has welcomed what it calls an effect ban on "flipping".
There was a slight deferral in the implementation date, of when it becomes mandatory for employers to make employee contributions to a fund offering a MySuper product, from 1 October 2013 to 1 January 2014.
Another government amendment will enable MySuper products which offer a life cycle investment strategy to seek authorisation to charge a maximum of four different investment fees, according to a statement from Minister for Financial Services and Superannuation Bill Shorten.
"Previously, these products were limited to a single investment fee. This change will avoid cross-subsidisation between members in different stages of the lifecycle strategy," the statement read.
The Government will move to legislate the remaining MySuper measures as soon as possible, Shorten stated.
The ISN said it applauded an effective ban on "flipping" (added to the legislation due to an amendment moved by the Greens' Adam Bandt), which it described as a practice used by large retail funds where "employees changing jobs are transferred without their informed consent into higher cost retail super funds, often with inferior insurance".
"Funds will no longer be able to hike fees without disclosing the changes to members and obtaining their written consent at the time of the proposed transfer," the ISN stated.
The ISN pointed to research it had commissioned from SuperRatings of 13 retail fund families, which found 12 of the 13 fund families exposed members to fee increases via automatic transfer (flipping) when leaving an employer, with average fee increases of $292 per annum.
AUTHOR
Staff Writer
Recommended for you
With just 30 per cent of Australians knowing their superannuation balance to the nearest $1,000, Findex has emphasised the role of financial advice in addressing the critical super knowledge gap.
Underestimating the cost of insurance by almost $75,000 in a Statement of Advice is among multiple reasons that a relevant provider has faced action from the FSCP.
Financial Services Council chief executive, Blake Briggs, is urging Minister for Financial Services, Stephen Jones, to take advantage of the QAR opportunity to reduce regulatory duplication and ensure advice is affordable.
Former chair of the House of Representatives’ Standing Economics Committee, Tim Wilson, is planning a return to politics after losing his seat in the 2022 federal election.
