The Federal Government announced recently that it’s going to reform the Superannuation industry in response to the recommendations of the Super System (Cooper) review.
The Government states that providing stronger superannuation represents good reform because it’s setting out a clear path for future reform(s), and provides certainty to both the industry and fund members.
Reports suggest that by the year 2050 there will be 27 people in the workforce for every 10 people aged 65 or over, compared with 50 for every 10 as is the case today…
The stronger Super program includes the introduction of a low cost and simple default superannuation product called ‘MySuper.’ In this, the Government is acting to reduce the unnecessary fees and charges on current plans whilst removing barriers to providing a low cost and efficient superannuation system.
It is estimated that such reforms will save [fund] members some $2.7billion a year in fees.
So the plan is that the Governments reforms will make the Superannuation system stronger and more efficient, and it will help to maximise retirement income for [fund] members, by:-
- Creating a new simple, low cost default superannuation product called ‘MySuper’
- Making the processing of everyday transactions easier, cheaper and faster through the ‘SuperStream’ package of measures, and
- Strengthening the governance, integrity and regulatory settings of the superannuation system, including in relation to self managed superannuation funds.
The Australian Prudential Regulation Authority (APRA) reports that around 80 per cent of workers [currently] prefer that someone else make their superannuation decisions, with default investment strategies being applied to 60.3 per cent of public sector fund assets and 50.8 per cent of corporate fund assets.
It is this ‘apathy’ [in managing funds] that’s driving the Federal Government's decision to adopt the Cooper superannuation review's recommendation for low-fee default superannuation accounts, (i.e. ‘MySuper’), which is scheduled to begin July 1, 2013.
Presently the Government is consulting with key stakeholders with regards to the implementation of its Stronger Super System. So we wait with interest the publication of further detail!