Shorten unveils super solution
THE government is a step closer to implementing a plan to cut the cost of saving for retirement by reducing waste in the $1.3 trillion superannuation industry.
THE government is a step closer to implementing a plan to cut the cost of saving for retirement by reducing waste in the $1.3 trillion superannuation industry.Bill Shorten, the assistant Treasurer, yesterday unveiled new details on MySuper, the low-cost super product being introduced from 2013.In exchange for a planned increase in the superannuation guarantee from 9 per cent to 12 per cent, super funds will be required to offer consumers a low-cost, default option with lower fees than many funds offer today.Under the plan, workers who have not chosen a fund will have their super contributions paid into a low-cost MySuper fund from October 2013.By July 2017, the government will require the hundreds of billions of savings held in today's default funds to be transferred to MySuper accounts in a bid to slash the fees paid by members.Mr Shorten said the plan would help cut the cost of saving for retirement by making sure people who did not take a day-to-day interest in their super were not overcharged."All the people who clip the ticket on your retirement accounts on the way through, they're going to be taking less," Mr Shorten said.The government expects the vast majority of accounts to move into MySuper products, which Mr Shorten said would not include unnecessary "bells and whistles" such as excessive fees for financial advice."They're not going to be paying for valet parking when they've caught the train," Mr Shorten said. Commissions paid by funds to advisers which have been shown to eat up workers' super balances will be banned within MySuper funds.With analysts estimating there are almost 30 million funds for 11 million workers, the plan also aims to help people consolidate different funds they hold.Any inactive funds holding less than $10,000 will automatically be consolidated into their active super account, another way of cutting fees.According to Treasury estimates, a 30-year-old worker in full-time work on near-average pay of $68,000 will have an extra $40,000 when they retire at 65 due to the planned changes.The opposition's spokesman for superannuation, Mathias Cormann, said he supported changes that would make super more competitive for members, but would inspect the reforms in detail before voting. Mr Shorten said he expected the first tranche of MySuper legislation in the coming months.WHAT YOULL SAVEForecast savings for a 30-yearoldfull-time worker between nowand their retirement, under thegovernments planCURRENT PROJECTEDWAGE SAVINGS$45,000 $26,000$68,000 $40,000$85,000 $51 000SOURCE: TREASURY