Superannuation changes at a glance
Parliament has passed a reform package which ABC News calls 'the most significant changes to superannuation in decades'. After the Opposition and backbenchers blocked the most controversial measures, what was left?
The most important changes include:
· The first fund people join will be 'stapled' to them, to stop people signing up to new funds every time they change jobs and getting charged multiple sets of fees
· Funds will be publicly ranked and face annual performance tests, and if they fail two years in a row the government can block people from joining them
· From 1 July, workers will be able to compare super funds on the new interactive online YourSuper tool. The tool will list MySuper funds, ranked by fees and investment returns, and show a member’s current super accounts, with a prompt to consolidate accounts if they have more than one, reports The Guardian
· Individuals aged 65 and 66 will be allowed make up to three years of non-concessional contributions to their super under the bring-forward rule without having to pass a work test rule
· Trustees will have to prove better information regarding how they manage and spend members’ money to prove they're acting in the best financial interests of members
· People will be able to contribute more than $25,000 per year into their super account without paying an excess charge of 3%.
The Opposition and backbenchers scuttled federal government plans to grant the Treasurer the power to step in and veto investments made by super funds. The move was criticised as an ideologically driven 'overreach' that could potentially allow governments to stop funds investing in things not to their political taste.
It could have also banned union officials from serving as fund directors.
The government was also defeated on a plan requiring funds to behave in the "best financial interests" of members, which could have prevented industry funds from political ad campaigns or lobbying.
Meanwhile, there are concerns that some bosses may make workers pay for their own super rises. The superannuation is set to rise from 9.5% to 10% from 1 July. The superannuation guarantee is the proportion of wages employers must contribute to workers' retirement savings.
Employment lawyers say if an employee's contract says their super is included in their total package, it might be legal for their boss to take that money out of their base pay.
"Provided the employees don't drop below the minimum permitted wages in an award enterprise agreement, or the minimum wage, then yes, it is permitted," Hall & Wilcox partner Fay Calderone told ABC News.
"It is absolutely shocking to me that employers would be trying at this point to try and avoid paying that small increase in superannuation," said ACTU President Michele O'Neil.
"This (the super rise) is something that is going to mean that for… the economy, and for our social security and pension system, we'll be better off if people have enough money to retire on and retire without living in poverty."