Super reforms to boost efficiency, cut red tape
Australians are set to derive significant savings from a key change in the Federal Government’s superannuation reforms which proposes to reunite almost 7 million inactive superannuation accounts with their owners.
According to research by the Financial Services Council and investment management technology provider DST Global Solutions, up to 6.9 million accounts – or a quarter of all accounts – would be consolidated into active accounts after the reform commenced on 1 January 2014.
The research, released today by Minister for Financial Services and Superannuation Bill Shorten, examined a proposal under the Government’s ‘Stronger Super’ reforms where inactive superannuation accounts with less than $1,000 will automatically roll over into their owners’ active accounts. Currently, 78 per cent of accounts containing less than $1,000 are identified as inactive
The Minister noted that the reforms would reduce the red tape burden on the industry and pave the way for lower fees for account holders.
“This reform will reunite many Australians with lost and inactive super – bolstering their super savings and meaning they can enjoy a more secure and independent retirement,” he said.
Chief executive of the Financial Services Council John Brogden, said the move to significantly reduce the number of accounts would improve the efficiency of the Australian superannuation system.
“There are 28 million superannuation accounts – nearly three for every working Australian. Many people have forgotten they have small amounts of money in super accounts from jobs they had years ago,” said Brogden.
“The automatic consolidation of inactive superannuation accounts will make the system more efficient and reduce overhead costs for superannuation funds. This is a big win for consumers as not only will it reunite people with their super, it will help drive superannuation fees lower.”
Philip Hogan, Managing Director for Asia Pacific at DST Global Solutions, said while the research findings were positive, the industry had a lot of work to do in order for the auto-consolidation process to be successful. Much of this would revolve around technology, he noted.
“The main challenge for the superannuation industry in preparing for auto-consolidation relates to development and implementation of technology, as data aggregation will be the linchpin to achieving efficiency,” Mr Hogan said.
“Respondents were unanimous that common data standards would make auto-consolidation more efficient, as standards will enable funds to communicate effectively with each other and with third parties, including the Australian Tax Office.
- Categories
- Banking
- Tags:
- Super reforms, DST Global Solutions, John Brogden, Philip Hogan, Bill Shorten
- Author:
- AB+F Online, mdavis@financialpublications.com.au
- Article Posted:
- February 22, 2012
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