With over one million super fund members receiving notification that their fund is underperforming, the Australian Institute of Superannuation Trustees (AIST) is urging members to consider the implications of the new superannuation stapling rules.
AIST’s general manager of advocacy, Melissa Birks, said many members were disengaged with their super and might not read the notification they received from their fund.
“We are particularly concerned about vulnerable members who may not be in a position to act on the information provided,” Birks said.
Birks said there were important considerations for members of these underperforming funds, including the fact that from 1 November, members would be stapled to their fund when they change jobs unless they nominate a different fund.
“Under the previous system, most people who changed jobs and didn’t nominate a fund were automatically defaulted into a fund, which on average, was a high performing fund,” Birks said.
But in the new system, members would be stapled to their fund regardless of whether it was a strong or poor performer, she said.
These new super rules – part of the Your Future, Your Super reforms – followed the release on 31 August of MySuper products performance test and the earlier Australian Taxation Office launch of a new comparison tool for the same products.
The new performance test saw 13 MySuper products covering more than one million members classified by the regulator as underperforming. These funds were given 28 days – until 27 September – to notify their members of the result.
Birks said members should consider making use of the ATO’s Your Super comparison tool which shows fees and net returns. Additionally, members should carefully consider their insurance needs, as switching funds causes insurance with their existing fund to cease.
AIST remained concerned the reforms do not treat every fund member equally because only MySuper products were assessed in the first year.
AIST said this left out a large group of Australians who were members of super products that fell outside of MySuper, and therefore would not be tested or included in the comparison tool.
However, the Australian Prudential Regulation Authority (APRA), said Choice products would be included in the next test.