Under new legislation, one in five superannuation accounts might have their fees slashed.
The “Protect your Superannuation” legislation, which passed through the Senate on 14 February, follows recommendations handed down by the Royal Commission into financial services.
Analysis has found that of 28 million superannuation accounts, safeguarding over $2.7 trillion in assets, over 5 million accounts are in line to have their fees cut to less than 3%.
The fee cuts are designed mainly to protect small super accounts of less than $1000, which fee charges can quickly reduce to nothing. AMP Super, Hostplus and ANZ OnePath are set to face the biggest impact, with accounts under $1000 ranging from 34% to 41% of their total number of accounts.
The analysis, by Rainmaker Information and published by advisory firm SelectingSuper, was based on data from the Australian Prudential Regulation Authority (APRA).
Alex Dunnin, director of research at Rainmaker, said many of the leading super funds had hundreds of thousands of small accounts owned by young people. This meant that younger super fund members were effectively subsidising older super fund members.
Further regulatory reforms to be put before the House of Representatives include:
Low balance super accounts that have been inactive for over 16 months will be automatically consolidated with the assistance of the Australian Taxation Office.
Accounts to the value of $6000 or less will have fees capped at 3%.
Exit fees will be removed, allowing members change super funds freely.