Default super reforms to reduce fees

An Australia-wide system for selecting default superannuation funds would reduce the incidence of employees having multiple super accounts and overall fees, according to IOOF.

IOOF said it supported reforms that made choosing a super fund simple and that promoted engagement as a response to the Productivity Commission’s (PC’s) recommended changes to default super funds.

IOOF head of client delivery, Steve Black, said: “From our own fund research, we know that employees who actively choose their super fund make more informed investment decisions leading to higher super account balances and better retirement outcomes”.

IOOF said a nationwide default system would also see those not nominating a super account being forced into a default only once, upon entering the workforce. This would see an end to the proliferation of super accounts and would lead to a reduction in overall fees through facilitating account consolidation into a single employee super account with a higher average balance.

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Citing the Australian Taxation Office (ATO), the financial services firm said the consolidation could save the 40 per cent of employees who had multiple accounts more than $500 a year, equating to $150 million in savings across the workforce.