What this week's super changes mean for you
Workers will be stapled to the first super fund they are in, rather than automatically opening up a new fund with each new job, under superannuation reforms that were passed in the Senate on Thursday.
Poorly performing funds will also be unable to accept any new members, under the Your Future, Your Super reforms.
One Nation and Jackie Lambie voted with the government in favour of the bill, while Labor and the Greens objected to it.
However, an amendment was passed which will delay benchmarking and stapling until November.
Independent Senator Rex Patrick failed to find support for his proposed amendment, which would have extended performance tests to more choice products in the retail super sector.
Labor Senator Deborah O'Neill passionately opposed the reforms this morning.
"How could it be that someone who calls themselves a Liberal could vote for this bill, could bring into this chamber a bill, which contains in it a provision to enable the Australian Treasurer to take control of Australian people's savings and to give that Treasurer the power to direct the way their savings are invested?" she said.
After debate, it was agreed that Treasury power to direct investments would be carved out of the laws.
Cbus was one of the super funds to voice its concerns about the reforms, saying its member-base in dangerous professions could have the wrong insurance if they are stapled to another fund.
Treasury proposed a review of exclusions in superannuation group insurance, but Cbus said this doesn't go far enough.
"A Treasury review of unspecified outcome or timing will do nothing to mitigate the immediate impacts for workers in hazardous sectors. Within months workers in hazardous occupations are at risk of being stapled to a fund containing exclusions or unfavourable terms and conditions because their existing insurance cover has not been tailored to their new job," Cbus chief executive Justin Arter said.
"Despite paying insurance premiums, stapled members in heavy blue-collar occupations or people working at heights may not be covered. Members and their families will likely only discover these exclusions when tragedy has struck - and they try and fail to make a claim against cover they believed they had."
The Australian Institute of Superannuation Trustees (AIST) originally supported the objectives of the reforms but now said they create more consumer harm and does not deliver on its objectives.
The AIST is concerned that one third of super savings will not be subject to the performance test.
"AIST remains deeply concerned that these legislative carve outs provide incentives to unscrupulous providers to push high fee, under-performing products onto unsuspecting consumers. Many Australians could remain stapled to dud products for life and be none the wiser as their super fund won't be subject to performance testing," AIST chief executive Eva Scheerlinck said.
AIST is also concerned that the reforms are heavily reliant on consumer disclosure to address underperformance and called for underperforming funds to be removed before any stapling began.
Industry Super Australia (ISA) agreed with the AIST and said the reforms will staple members into products that may fail the performance test.
"At least 2.6 million super fund accounts are locked in funds that could fail performance tests - many more workers are in funds that will not be tested," ISA said in a statement.
Meanwhile, the Financial Services Council (FSC) disagreed and said the reforms are a significant win for consumers, particularly regarding the stapling recommendation and the performance benchmarking.
"The FSC has been a vocal and long-term advocate for stapling and our analysis shows that having a single superannuation account will save Australian workers up to $1.8 billion in fees over the first three years," FSC chief executive Sally Loane said.
"The new performance assessment will work alongside stapling to give Australians confidence that their superannuation is generating 'best in show' investment returns throughout their working lives. If a consumer is concerned their fund's returns are substandard the ATO comparison tool will be available as an impartial source of information to help consumers choose a better fund."
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