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Super funds will struggle to meet Govt deadline
Superannuation funds are unlikely to be able to meet the deadline for implementing some of the Government’s key legislative changes to superannuation, which were pushed through the Senate last week.
Major consultancy KPMG has warned the 1 July, 2019 implementation time-frame for the changes may be out of the reach of many superannuation funds.
KPMG partner, superannuation advisory, Adam Gee said that while amendments to the legislation made it more palatable the implementation timeframe of 1 July was unlikely to be achievable given the requirement for funds to communicate material changes to members at least 90 days before the changes occurred.
“We would prefer to see a reasonable timeframe for funds to implement the changes to ensure affected members are fully aware of the impact of the changes on their arrangements,” he said.
KPMG also warned that other changes contained in the bill, surrounding the automatic transfer of small accounts to the Australian Taxation Office (ATO) and the capping of fees for small accounts were likely to place significant pressure on fund sustainability, given the impact they would have on revenue models particularly for those with large inactive and small account membership bases.
“Unless funds are able to find material administrative cost savings or other operational efficiencies, fees for remaining members could increase longer term as a result,” Gee said.
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The irony is, by forcing superfunds and administrators to rush these changes through the subsequent negative impacts to members will far outweigh the benefits that the legn was trying to achieve. How can a fund argue they are acting in the best interests of members when they have not been given adequate time to redesign their products?
If they are unable to adapt to the changes, then successor fund transfer your members to a fund that can. Surely members best interest trumps all other considerations!