The Government’s proposed Your Future, Your Super (YFYS) package will be weakened if it is not legislated to apply to all products by 1 July, 2022, Super Consumers Australia believes.
The advocacy group’s submission to the Senate Standing Committee on Economics on the YFYS bill hit back at critics of the legislation who were advocating for a delay to stapling.
It said the calls for a delay were make on a “false assumption” that underperforming funds would continue to underperform for an extended period of time.
Super Consumers said under the package, underperforming funds would be cut off from new member flows and were required to notify existing members they were underperforming and would be under the direction of the Australian Prudential Regulation Authority.
“So long as the test is applied to all superannuation products the threat of being labelled an underperformer and associated repercussions will inevitably lift performance across the board,” the submission said.
“Arguments to delay stapling are built on the premise of protecting the limited number of people who change jobs, do not exercise choice, and are defaulted into a second fund that happens to provide better retirement outcomes than their original fund.
“Only a fraction of the population fit into this demographic and it ignores the fact that these people will be protected, because the existing stock of underperformers will need to lift performance if they want to continue to accept members and avoid losing existing members.”
Super Consumers said the package would be weakened if not legislated by 1 July, 2022, and that it should be extended to all super investment options, not just MySuper and other trustee directed products.
“Failure to do this will see people subject to investment options that face no scrutiny, leaving trustees with no incentive to lift performance,” it said.