SMSF investment underperformance costing $13,000 per fund

SMSF investment underperformance is costing each fund around $13,000 over the past year, according to SuperGuard 360.

SuperGuard 360 compares the performance of SMSFs, based on reporting asset holdings, to the investment strategies of MySuper super funds. It found that returns, before fees and taxes, for SMSFs were 6.6% at the end of April 2018. If SMSFs had invested as MySuper products it is estimated they would have returned 7.8%.

This 1.2% less in investment returns is estimated to cost $8 billion across the sector, or $13,000 per SMSF. Read more...

Workers with unpaid super “balloons” to almost 3 million

Industry Super Australia has told a Senate committee that more action is needed to address unpaid superannuation, after the number of workers impacted “balloons” to almost 3 million.

An analysis of the most recent ATO data, by Industry Super Australia, finds that 2.98 million workers have been “short-changed” on their Superannuation Guarantee entitlements in 2015/16 – the most recent year for which data has been released. This is up from 2.76 million in 2014/15.

The average super underpayment is $1,995 for each worker. Read more...

ASIC grants additional time to update disclosure documents for AFCA

Super funds have been granted additional time to update disclosure documents with details of the Australian Financial Complaints Authority (AFCA).

AFCA will start dealing with complaints from 1 November 2018. The new external dispute resolution body replaces the SCT, CIO and FOS.

ASIC has announced that it has granted super funds and financial firms disclosure relief during the transition to AFCA. The transitional relief applies until 1 July 2019, which ASIC says will allow them time to update mandatory disclosure documents and periodic statements. Read more...

Bernie Dean to replace David Whiteley at Industry Super Australia

Bernie Dean will replace David Whiteley as Chief Executive of Industry Super Australia.

In April it was announced that David Whiteley would be leaving Industry Super Australia to take up a position with IFM Investors. Bernie Dean will take over as Chief Executive starting on 1 September 2018.

“Bernie assumes the role after a long career working with government, unions and employer groups to improve the lives of working people,” said a statement by Industry Super Australia announcing the appointment. Read more...

APRA to review Stronger Super reform prudential framework

APRA has announced it has begun a ‘post-implementation’ review of the superannuation prudential framework changes in the 2013 Stronger Super reforms.

“The aim of the review is to ensure the prudential and reporting standards, and related guidance, have achieved their objectives and continue to remain fit for purpose,” said APRA.

APRA said its objective in this review was “neither to weaken nor strengthen the prudential framework”.

“APRA will, however, consider changes to the prudential framework to address any gaps identified or issues raised during the review process to improve its effectiveness.” Read more...

Productivity Commission has concerns about sub $1 million SMSFs

The Productivity Commission has concerns about SMSFs with less than $1 million, blaming higher costs for poor net returns.

In its draft report about the efficiency and competitiveness of the superannuation system the Productivity Commission raises concerns about the returns and costs of smaller SMSFs.

One of the draft findings of the Commission is that SMSFs have generally tracked the long-term investment performance of APRA-regulated funds. But it also find that “many” SMSFs with balances under $1 million have “materially lower returns on average”. Read more...

Labor wants to amend Super Guarantee amnesty

Labor plans to try to amend the Government’s Superannuation Guarantee Bill, potentially with the aim of removing the measure entirely.

Last week the Government introduced legislation which would create a 12 month Super Guarantee amnesty for employers.

“The Prime Minister had absolutely no idea of these moves when asked about it by the Leader of the Opposition in Question Time today,” said Shadow Treasurer Chris Bowen, after Labor took aim at the proposal.

The first question in Question Time on Tuesday was from Opposition Leader Bill Shorten: “My question is to the Prime Minister. Can the Prime Minister please explain to the Australian people why it is government policy to forgive businesses who have illegally failed to pay their employees superannuation for over 25 years by waiving all penalties and rewarding them with tax deductions?” Read more...

Parliament to inquire into why super funds not investing in agriculture

A Parliamentary committee is inquiring into barriers to superannuation funds investing in agriculture.

Last week the Treasurer asked the House of Representatives Standing Committee on Agriculture and Water Resources to inquire into the issue.

MP Rick Wilson, the Chair of the Committee, said Australian agriculture is in danger of being left behind due to a lack of investment

“The agricultural sector in Australia needs much more investment if it wants to remain competitive, and the superannuation industry is an obvious source of that. With this inquiry, the Committee hopes to find out how investment can be encouraged,” he said. Read more...

Shortlist of super funds should replace current default fund system: Productivity Commission

The Productivity Commission is likely to recommend the current system for setting default super funds be replaced with a ‘best in show’ shortlist of funds from which employees would pick a single default super fund for their working life.

The Productivity Commission has publicly released its draft report into the efficiency and competitiveness of the superannuation system. It finds that the super system needs to adapt to the needs of a modern workforce and increasing numbers of retirees.

The Commission notes that some super funds consistently have high net returns, while a “significant number of products (including some defaults) underperform markedly”. Read more...