The Federal Government has been warned that some of its changes to superannuation legislation, including the fee cap on low balances remain open to being ‘gamed’ by people with high account balances.
In a submission filed with the Federal Treasury responding to a range of amendments to the recent legislation, the Association of Superannuation Funds of Australia (ASFA) has warned that people who exit a superannuation fund part-way through a year may be able to ‘game’ the system.
The ASFA submission said the organisation had brought the situation to the attention of Treasury in a submission filed in March, this year, and that it remained concerned “that the annual balance test could have unintended consequences or be used to minimise fees in high balance accounts”.
“The balance day test, or the test for the day the member ceases to hold the account, does not appear to allow for the possibility of the account having had a higher balance in the previous 12 month,” it said noting that while some amendments had clarified the treatment of members that ceased holding the product during the fund’s income year, “it does not prevent a member from ‘gaming’ the application of a fee cap on low balances”.
“This is a significant concern,” the ASFA submission said suggesting that one protection for this would be to raise the minimum retained balance to a level higher than $6,000, such as $8,000.