The Morrison government has passed its controversial Your Future, Your Super bill through Parliament after winning the support of Jacqui Lambie, Pauline Hanson and Stirling Griff.
The bill’s passage through the upper house on Thursday marked the end of a difficult few weeks of negotiations for the Coalition, which requires the support of crossbenchers in both houses to pass legislation.
Their opposition forced the government to ditch a controversial reform that would have given the Treasurer of the day the power to step in and cancel any investment made by a super fund.
And a similar measure enshrined in regulation was abandoned during negotiations with the Senate crossbench, before the amended bill passed through the lower house for the second time on Thursday afternoon.
Here’s a brief summary of the major changes on the way.
Super fund stapling
One of the central changes in the Your Future, Your Super bill is a measure aimed at reducing the creation of duplicate accounts when workers start new jobs, as this can result in members paying fees to multiple funds.
The changes will ‘staple’ workers to the first super fund they join unless they explicitly choose to join another.
At the moment, employers can sign up employees to a new fund when they start a new job.
Superannuation Minister Jane Hume said before the Senate vote on Thursday that these reforms would save Australians “$17.9 billion in fees and lost performance over the next 10 years”.
And Super Consumers Australia director Xavier O’Halloran described them as “a leap forward in improving superannuation for consumers”.
But Labor said it would lock workers in poorly performing funds and put them at risk of underinsurance if they moved from a low-risk industry, such as retail, to a high-risk one, such as construction.
As a result, it wanted dangerous jobs to be exempt from stapling to ensure members received the benefits of group insurance.
Industry Super Australia also asked the government to amend the legislation so that Australians could only be stapled to funds that passed new performance tests.
But this suggestion was knocked back and ISA estimates the decision could cost a median wage earner who starts their working life at 20 and changes jobs at 23 about $230,000 over the course of a 38-year career.
The stapling measure was delayed until November 1 while other changes will come into effect on July 1.
New performance testing
Another measure central to the legislation is the introduction of new annual performance tests.
These will be governed by financial regulator APRA and measure super funds against an industry benchmark for financial returns to members.
Funds that fail to meet these benchmarks for two consecutive years will be barred from taking on new members in a move that is expected to protect Australians from handing over money to dud funds.
But the government has come under criticism for leaving out of the performance reviews ‘choice’ products in which about four million Australians have their super invested.
New comparison tool
The results of the annual performance tests will feed into a new public comparison tool run by the ATO called YourSuper.
Mr O’Halloran said this would “shine a light on the best products on the market”.
“For the first time, people will be able to compare and easily find a better deal,” he said.
Best Financial Interests Duty
The changes will also introduce a new Best Financial Interests Duty to ensure all super fund expenditure is in the interests of members.
The move is partly motivated by the Coalition’s desire to shut down what it considers to be overly political advertising by industry super funds.
But funds argue the measure runs counter to a key recommendation of the Hayne royal commission and will lead to higher costs for members, as funds would have to carry out additional compliance “without any corresponding benefit”.
As it stands, super funds are already legally obliged to act in their members’ best interests.
The New Daily is owned by Industry Super Holdings