The super reforms that were - and weren't - in the Budget
Expected to be confirmed in the Budget, the Super Guarantee was not mentioned as Treasurer Josh Frydenberg focused instead on the government's announcement that people starting new jobs will no longer need to create new super accounts.
"Under our reforms, your super will follow you," says Frydenberg.
Consumers will be able to use the government's new "YourSuper" tool to better compare super funds by providing Australians with transparent and trusted information about fees and returns.
Frydenberg says the new tool will save unnecessary fees being paid as a result of six million multiple super accounts that people accrue when starting new jobs.
Super Consumers Australia director Xavier O'Halloran welcomes the government's superannuation measures.
"Australians are paying far too much in fees across multiple accounts. These reforms clean up zombie accounts accounts that have eaten away people's retirement savings for too long," he says.
O'Halloran also welcomes the proposed comparison tool.
"Super Consumers Australia supports the government's announcement that it will require superannuation products to meet an annual performance test to protect members from poor outcomes and encourage funds to lower costs. It will be important for the test to include the right mix of performance indicators and we look forward to working with the Government and regulators to ensure this."
Rainmaker Information's (publisher of Money) just-released superannuation fee study revealed superannuation fees have already fallen significantly in recent years.
The current super industry-wide fee ratio now sits at 1.04% after falling 5%.
To push fees lower, consumers are going to have to choose lower fee funds and switch into indexed investments, doing that could lower fees to as little as 0.5%.
However, according to Rainmaker Information head of research Alex Dunnin, says while indexed investments are cheaper to run, it will divert money away from unlisted assets like infrastructure , development capital and direct property - the very sectors the government will need super funds to invest into the rebuild the economy.
"It is typically the outperformance of unlisted assets that has underpinned the outperformance of many of Australia's top performing super funds," says Dunnin.
Association of Superannuation Funds of Australia chief executive Martin Fahy says the country doesn't suffer from a shortage of good funds and "we need to ensure that these measures don't reduce competitive intensity or damage the nation building role of superannuation."
As no mention was made to hold off the increase in super - it is anticipated that the 0.5% increase will go ahead from July 1, 2021 - providing Australians with 10% Super Guarantee. This will gradually increase until it reaches 12% in 2025.
For the average wage, currently at $89,128, this will see an added $445.64 a year into super.
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