The Australian Securities and Investments Commission (ASIC) has warned superannuation funds and their trustees to provide helpful and balanced communications to their members in line with reforms to the industry due to begin on 1 July.
ASIC Commissioner Danielle Press (pictured) said the Protecting Your Super Package (PYSP) reforms were designed to protect the superannuation savings of Australians from erosion due to inappropriate fees and insurance premiums as well as reducing unintended multiple low balance accounts.
Ms Press said the reforms involved changes that would see insurance as the opt-in for members whose accounts had been inactive for 16 months, and fund members with balances under $6,000 whose accounts have been inactive for 16 months having their accounts paid to the Australian Taxation Office (ATO).
The ATO would take proactive steps to consolidate this with the members’ active super fund.
In addition, fee caps would be imposed on certain fees for account balances under $6,000, and exit fees would not be charged for moving money from a superannuation account.
“Erosion of superannuation through unnecessary fees and premiums for potentially unsuitable insurance is a significant issue for many Australians,” Ms Press said.
“Most consumers are not aware of the fees and insurance premiums charged to their superannuation accounts or the steps they can take to avoid unnecessary reduction in their super balance.”
She said the PYSP changes would encourage the consolidation of multiple low-balance superannuation accounts and help ensure members had insurance arrangements that were suitable for them without unnecessarily eroding their super balance.
Ms Press said the ATO estimated that approximately three million accounts worth around $6 billion would be proactively consolidated as a result of the reforms.
