The Australian Superannuation industry in recent times has been subject to a multitude of changes, and there are even more coming in the 2013/14 financial year. The government is introducing a new reform called ‘Stronger Super’. Stronger Super is one of the most significant reforms to superannuation since the introduction of the superannuation guarantee and will cover a broad range of issues. It will affect each and every person differently, so it is important to talk to a financial planner about these changes to see how you can prepare.
The first reform is in regards to what’s called ‘MySuper’. MySuper is a new, simple and cost‐effective superannuation product that will replace existing default products. MySuper products will have a simple set of product features, irrespective of who provides them. They may also offer services such as life insurance and financial advice. All funds will have to offer MySuper as their default investment option, whether they are industry, public sector, corporate or retail funds. Because these changes are new and unfamiliar, it’s going to be very important to seek professional advice on how to best deal with any issues that arise for you and your financial situation.
Another reform is being introduced to make the ‘back office’ part of the industry more efficient. This is called Super Stream and will have flow on effects to all aspects of the
A big part of this initiative is to help consolidate lost and inactive super accounts. Whilst this consolidation is not officially a part of the Stronger Super reforms, it is one that could potentially affect the most number of people and is an example of the previously mentioned flow on affects.
It’s not hard to see why these accounts exist. It’s uncommon for a person to take their existing super account with them when they start with a new employer. It’s much easier to sign up to the default employer plan and just leave the last one alone. For those lost or inactive accounts out there that are less than $2,000, the government will be transferring them to the ATO. This has both its positive and negatives. It is great that the government is helping consolidate lost super that people don’t know about, but what this could possibly do is take away any attached insurance that these accounts may have. This is putting the account owner at a disadvantage. There are millions of accounts listed on the Lost Member Register, so it is possible that an account could belong to you.
It’s likely that it will be more difficult to transfer these accounts into your main super account once they are with the ATO, so it is highly recommended that you get on the front
foot by seeking advice and getting some help.