POWERED BY MOMENTUM MEDIA
Treasury warned super fee cap can be ‘gamed’
The Federal Government has been warned that some of its changes to superannuation legislation, including the fee cap on low balances remain open to being ‘gamed’ by people with high account balances.
In a submission filed with the Federal Treasury responding to a range of amendments to the recent legislation, the Association of Superannuation Funds of Australia (ASFA) has warned that people who exit a superannuation fund part-way through a year may be able to ‘game’ the system.
The ASFA submission said the organisation had brought the situation to the attention of Treasury in a submission filed in March, this year, and that it remained concerned “that the annual balance test could have unintended consequences or be used to minimise fees in high balance accounts”.
“The balance day test, or the test for the day the member ceases to hold the account, does not appear to allow for the possibility of the account having had a higher balance in the previous 12 month,” it said noting that while some amendments had clarified the treatment of members that ceased holding the product during the fund’s income year, “it does not prevent a member from ‘gaming’ the application of a fee cap on low balances”.
“This is a significant concern,” the ASFA submission said suggesting that one protection for this would be to raise the minimum retained balance to a level higher than $6,000, such as $8,000.
Recommended for you
A member body representing some prominent wealth managers is concerned super funds’ dominance is sidelining small companies in capital markets.
Earlier this month, several Australian superannuation funds fell victim to credential stuffing attacks, which saw a small number of members lose more than $500,000.
Small- to medium-sized funds have become collateral damage in an "imperfect" model for super industry levies, a financial institution has said.
Big business has joined the chorus of opposition against the proposed Division 296 tax.
TOP PERFORMING FUNDS
ACS FIXED INT - AUSTRALIA/GLOBAL BOND
Fund name
3y(%)pa
1
DomaCom DFS Mortgage
90.28 3 y p.a(%)
2
GAM LSA Private Shares AU I
37.08 3 y p.a(%)
3
DomaCom Lot 21 Chellaston Road Munno Para West SA 5115 Australia
31.44 3 y p.a(%)
4
Fidante Credit Suisse Global Private Equity
31.12 3 y p.a(%)
5
Global X GlobalX FANG+ ETF
28.28 3 y p.a(%)
