An extra $40,000? Super

Like an extra $40,000 in your superannuation payout, when you retire?

The Federal government says a 30 year old worker, on average weekly earnings, can now look forward to that benefit, on retirement.

A senior minister, Bill Shorten, says that will be achieved through the government’s Stronger Super reforms.

Mr Shorten, who is Assistant Treasurer and Minister for Financial Services and Superannuation said this would be broadly equivalent to a 1 percentage point increase in contributions.

He said the key elements of the reforms are:-

• Creating MySuper, a new simple, low cost default superannuation product from 1 July 2013

• Providing the relevant authorities – APRA, ASIC and the ATO – with the tools they need to improve their oversight of superannuation and

• Improving the administration and management of super accounts through SuperStream reforms, which would make the processing of everyday transactions easier, cheaper and faster for members and employers.

“Once fully implemented, these reforms could reduce the fees paid by members by up to 40 per cent,” Mr Shorten said.

Private superannuation funds welcomed the announcement.

Pauline Vamos, the Chief Executive of the Association of Superannuation Funds of Australia, said the reforms will help funds to respond better to the changing needs of both employers and employees.

“These are long awaited reforms which touch upon all aspects of the superannuation industry,” Ms Vamos said.

“The advent of MySuper and increased ‘back of house’ efficiencies’ through SuperStream will deliver better retirement outcomes for most Australians,” she added.

The proposed reforms follow detailed studies, much consultation, and official inquiries.

Australia’s superannuation industry has developed in a haphazard fashion.

The problems that have arisen, as a result, include expensive trailing commissions – and many lost superannuation accounts – that are simply left behind when people change jobs.

Small employers, too, have reported difficulties meeting their obligations to manage the superannuation accounts of their employees.

All of these issues – and many more – will be tackled in the proposed reforms.

Mr Shorten is promising, too, that there will be further detailed consultations, with interested parties, before the proposed legislation is sent to Parliament, to become law.