Key reforms suggest a $40,000 super boost for workers



By Steve Lewis    

Millions of workers will get an extra $40,000 in savings and be able to easily check their expected retirement “nest egg” as part of a superannuation revolution.

High-cost fees and commissions that gouge thousands of dollars from super accounts will be slashed for about eight million Australians.

A high-level review to the Gillard Government recommends new powers for people to compare super schemes and the ability to switch to another if they are being ripped off.

As revealed by The Daily Telegraph yesterday, the Cooper review of superannuation has found millions are paying excessive fees and charges—even on basic accounts.

It slammed the current system as complex and a mystery to most people and wants reform to ensure most workers retire with extra savings.

In another potential election sweetener, the review has recommended a no-frills style MySuper product be introduced within two years.

The new scheme would deliver a healthier return and reduce fees for about 80 per cent of workers.

For instance, super funds would no longer be able to gouge thousands of dollars in exit and other fees.

According to the Cooper review, these reforms would slash fees by 40 per cent and deliver a $40,000 savings dividend for a 30-year-old worker who saves until they reach 67.

The review, chaired by Melbourne lawyer Jeremy Cooper, also wants to make it easier for people to check how much they are being charged.

Standard product “dashboards” — offering a quick check on fees and forecast returns — “would lift the fog that has clouded” superannuation, the review claims.

About 11 million Australians have superannuation and there are 33 million accounts.

But the Minister for Financial Services and Superannuation, Chris Bowen, said the sector, which holds $1 trillion in funds, needs to be modernised. “Superannuation has served us well over the last 20 years but needs to be dragged into the 21st century,” he said.

National Seniors Australia chief executive, Michael O’Neill, said an overhaul was “well overdue”.

But the Investment and Financial Services Association, which represents retail super funds, slammed MySuper as “overly paternalistic”.

Article from The Daily Telegraph, July, 2010.