As many as 4.4 million Australian workers are paying more than one set of superannuation fees due to holding multiple accounts, with new rules from Monday aiming to address the issue.
As of 1 November, employees who are changing jobs will have their superannuation fund follow them, in a move Treasury believes will boost balances by $2.8 billion over the next 10 years.
The new rules mean that when changing jobs, a new employee will continue receiving contributions into the same ‘stapled’ fund, rather than being automatically signed up for their employers’ default superannuation option - unless they opt to remain with their current fund.
According to Treasury modelling, the average worker with a $58,000 starting salary would have $399,000 in 40 years if they held multiple accounts. If they had a single ‘good’ account, they would have $497,000.
The new rule was introduced as part of the Federal Government’s Your Future Your Super reforms in 2020.
Concerns superannuation members stapled to ‘dud’ funds
However, as many as 1 million Australians could be inadvertently stapled to a ‘dud’ fund, according to Australian Prudential Regulation Authority (APRA) figures.
The financial watchdog in September found that 13 funds had failed to meet its performance and fees benchmark. Those funds service around 1.1 million Australians, and manage $56.2 billion in funds.
Responding to the performance benchmarks in September, the Australian Institute of Superannuation Trustees (AIST) called on Australians to consider their options carefully, given the new stapling provisions.
“While MySuper members will have access to information about their fund’s performance, there are thousands of super products that haven’t been tested or included in the comparison tool,” AIST general manager of advocacy Melissa Birks said.
“This leaves a large group of Australians potentially stapled to a dud fund when they change jobs after 1 November.
“Unfortunately, it’s likely that this will happen to many, many Australians and will have a detrimental impact on their retirement savings."
Birks said fund members should use the ATO’s Your Super comparison tool to look at the fees and net returns on their products, and also look closely at their insurance within super before they switch, as switching automatically cancels the previous cover.
Investment platform StockSpot also offers superannuation comparison through its annual Fat Cat Funds Report, which looks at funds’ performance and fees and risk profile.