MySuper is on its way

MySuperThe Government’s MySuper reform aims to provide Australian workers with a cost-effective superannuation account with basic features and fee structures. Prior to the introduction of MySuper, employees that did not actively choose a super fund were automatically added to their employer’s default super fund. With the introduction of MySuper, employee contributions will have to go into an approved MySuper product.

There are numerous benefits to MySuper, some of which include the following:

The Fees

Because the product offering will be simpler, the fees that can be charged will ultimately be lower. The reason for this is because more complex fund offerings with a large number of choices are far more expensive. The simpler products offered under MySuper will not need the same complex Product Disclosure Statements as regular funds.

The main fees that will apply include:

  • an administration fee;
  • an investment fee;
  • other fees–such as investment switching, exit fees and contribution splitting–which are limited to the cost of providing the service.

Insurance

All MySuper products are required to offer life and total and permanent disability cover to most members. This means that most members will automatically receive a prescribed level of insurance cover upon joining the fund. That being said, the insurance is provided on an opt-out basis which means that should a member opt-out of the cover, they will no longer be charged an insurance premium cost.

Investment options

MySuper products will offer only one investment option which will generally be an employer’s default investment option. However, because of the regulations surrounding MySuper products, super funds and wealth management groups that wish to compete in the workplace default superannuation market will need to apply to the superannuation regulator, the Australian Prudential Regulation Authority (APRA), for authorisation to offer MySuper products.

Disclosure

The level of trustee disclosure in relation to fees, investment performance and investment allocation will be much higher than before. Super funds will be required to publish their full portfolio holdings on their website twice a year which in turn will allow APRA to publish data comparing long-term net returns. This increased transparency will make it easier for people to compare funds and to ensure that they are receiving the best value possible.

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