‘Your Future, Your Super’ reforms bring more accountability


What will the federal government reforms actually deliver? Here’s a brief overview.

Key Points


  • Reforms will see super funds subject to a performance test
  • The Productivity Commission previously highlighted Australia's relatively high super fees
  • Experts say that some funds could improve their returns by changing investment strategies, but other won't survive

Did you know we pay more than $30 billion a year in superannuation fees? That’s the equivalent of about 1.5% of GDP. According to commentators, fees as a percentage of funds are high by international standards.

So, recent federal government reforms to the super system, acting on Productivity Commission 2018 recommendations, have been described as the most radical since super was introduced. Self-described "people’s advocate in the super sector", Super Consumer’s Australia (SCA) has welcomed the reforms saying they will weed out many of the underperforming funds in the system and help consumers find better options for their retirement savings.

“The reforms will also help people save money by keeping their super in one account, putting a stop to multiple zombie accounts. Creating a system which will lead to people having a single, high quality account is a leap forward in improving superannuation for consumers,” Super Consumers Australia director Xavier O’Halloran said.

“The YourSuper fund comparison tool will shine a light on the best products on the market. For the first time, people will be able to compare and easily find a better deal.”

Reforms summary


  • Here are some extracts from the Government’s media announcement:
  • The passage of the Treasury Laws Amendment (Your Future, Your Super) Bill 2021 will save Australians $17.9 billion over 10 years.
  • Having your superannuation follow you, preventing the creation of unintended multiple superannuation accounts when employees change jobs. This will commence from 1 November 2021.
  • Making it easier to choose a better fund, with access to a new interactive online YourSuper comparison tool. This will commence from 1 July 2021.
  • The Government will require superannuation products to meet an annual objective performance test. Those that fail will be required to inform members and persistently underperforming products will be prevented from taking on new members. Members will be notified by 1 October 2021 if their fund fails this test.
  • Increasing transparency and accountability, with the Government strengthening obligations to ensure trustees only act in the best financial interests of members and provide better information regarding how they manage and spend members’ money.

For more information and commentary about the reforms click here (CHOICE) and here (Firstlinks).

Media commentary


The Australian Financial Review’s Economics Editor, John Kehoe, calls the reforms a “very big deal” and is critical of the industry funds, Labor lobbyists and parliamentary cross-benchers who opposed the legislation.

He says the reforms will divert an estimated $18 billion over a decade from the super industry and other vested interests to the retirement incomes of super fund members.

Mr Kehoe’s summary is that the government is lowering fees, increasing competition between funds, improving accountability of super fund trustees and directors, and weeding out serial underperforming funds.

“[The reforms have] … slashed the 6 million duplicate accounts, consolidated inactive and low-balance accounts to stop them being eroded by fees, banned exit fees on people changing funds, capped fees on low-balance accounts and banned default life insurance inside super for people aged under 25 so young people don’t subsidise old people.

“The government has banned super funds offering inducements to influence employers in their choice of default fund. It has forced funds at annual general meetings to publish remuneration, as well as spending on advertising, lobby groups and - direct and indirect – donations,” he wrote in the AFR.

The “stapling” of workers to their first job fund will prevent the creation of unintended multiple super accounts when employees change jobs.

Kehoe predicts the reforms will advantage AustralianSuper, the Retail Employees Superannuation Trust and Hostplus which dominate default funds for younger workers in industries such as retail and hospitality.

Funds will be benchmarked against a performance test, and those found to be underperforming for more than two years will be forced to write to members and be prevented from taking new members. They may ultimately be shut down by the prudential regulator.

Consumers will be able to click on their myGov account to a new Australian Taxation Office tool to compare the performance of their fund. They will be able to easily change funds via the online platform and first-time workers will be directed to the ATO comparison tool when selecting their first fund.

Sources: Super Consumers Australia and Australian Financial Review.