The banking Royal Commission has shed light on the way Aussies have been gouged by the major financial institutions through excessive fees. And unsurprisingly, it has sparked a new raft of reforms that spell better outcomes for consumers.
The owners of super fund accounts with balances of less than $6,000 could see their fees slashed to less than 3 per cent thanks to the new ‘Protect your Superannuation’ legislation.
More than five million accounts would be affected. This is good news for young Aussies in particular, who have smaller super fund balances.
The legislation also includes; automatic consolidation of low balance super accounts that have been left for over 16 months through the ATO, and for superannuation exit fees to be axed, meaning it won’t cost Aussies to leave their super fund.
The legislation passed through Senate last Thursday but still needs to pass the Upper House.
“For these members just starting out in super, if their fund has a flat dollar member fee of say $100 per year it can translate into extremely high percentage fee rates,” Rainmaker director of research Alex Dunnin said.
“If the reforms pass into law this will be a real win for these consumers.”
Which super funds are most affected?
Super funds with the highest number of accounts with balances less than $1,000 will be the most affected by the pending legislation.
As at 30 January last year, AMP Super, Hostplus and ANZ OnePath were the super funds with the highest proportion of accounts under $1,000 (at 34 per cent, 32 per cent and 41 per cent respectively), according to Rainmaker research.
Other super funds with a high proportion of low-balance accounts are REST, Sunsuper, BTFG, Australian Super, MLC Super, CommBank, and Cbus.
Make your money work with Yahoo Finance’s daily newsletter. Sign up here and stay on top of the latest money, news and tech news.