Super changes welcome as commissions axe poised
Your superannuation is about to get a big boost when the federal government slashes fees and bans contribution charges and trailing commissions.
The man behind the moves is Jeremy Cooper, who headed the government's Cooper Review Panel looking at ways to optimise superannuation.
"Carefully implemented, the proposals could add tens of thousands of dollars to workers' retirement savings," says David Whiteley, chief executive of the Industry Super Network.
A new superannuation fund called MySuper will have fees half what many super fund members currently pay, according to an independent report commissioned by accounting firm Deloitte.
Cooper says Australians are free to belong to a fund that offers more choices and options or manage their own super in a self-managed super fund (SMSF).
MySuper would be one fund of many, but the Cooper Review believes a number of MySuper features - such as the trailing commission ban - will be recommended to apply across all super funds.
The Cooper Review Panel also recommended that SMSFs should be prohibited from investing in collectables and assets such as artworks, wine collections, exotic cars and yachts.
"Australia's self-managed superannuants need to stay focused on investing for retirement savings, rather than related-party transactions, collectables and leverage," says Cooper.
"Do that and self-managed super funds start to look much more like the legitimate vehicles for retirement savings that they actually are."
Cooper called for better scrutiny of the competence and independence of approved SMSF auditors, improved SMSF industry data, and an online SMSF resource centre to help members build skills and make better decisions.
It would improve the tax office's penalty regime, tighten the SMSF registration process and introduce member identity requirements which would help cut fraud and illegal early release schemes using SMSFs.
Cooper is concerned about the large number of SMSFs with small assets that are not cost effective because of fees such as auditing costs.
At June 2008, there were roughly 108,000 SMSFs with less than $200,000 in assets and more than a third had less than $50,000. The review is looking at ways to stop people with small balances setting up SMSFs.
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