A quarter of all accounts to go - FSC/DST Global Solutions research
Research shows Government super reforms boost efficiency and reduce red tape
Australians are set to benefit from significant savings in superannuation as 6.9 million inactive superannuation accounts are reunited with their owners, according to research by the Financial Services Council and investment management technology provider DST Global Solutions.
The research, released today by Minister for Financial Services and Superannuation the Hon Bill Shorten MP, looked at a key change under the Government’s ‘Stronger Super’ reforms where inactive superannuation accounts withwith less than $1,000 will automatically roll over into their owners’ active accounts.
It found 6.9 million accounts, or a quarter of all accounts, would be consolidated into active accounts
after the reform commenced on 1 January 2014.
“This reform will reunite many Australians with lost and inactive super – bolstering their super savings and meaning they can enjoy a more secure and independent retirement,” the Minister said.
“It will also reduce the red tape burden on the industry and mean lower fees for account holders, leaving them with more money to invest in their nest egg,” the Minister said.
John Brogden, CEO of the Financial Services Council, said this considerable reduction in the number of accounts would significantly improve the efficiency of Australia’s superannuation system and lead to lower fees for consumers.
“There are 28 million superannuation accounts – nearly three for every working Australian. Many
people have forgotten they have small amounts of money in super accounts from jobs they had years ago,” Mr Brogden said.
“The automatic consolidation of inactive superannuation accounts will make the system more efficient and reduce overhead costs for superannuation funds. This is a big win for consumers as not only will it reunite people with their super, it will help drive superannuation fees lower.”
Philip Hogan, Managing Director, Asia Pacific at DST Global Solutions, said while the findings reflected positively on the Government’s efforts to make superannuation more efficient, the industry had a lot of work to do to prepare for the changes.
“The main challenge for the superannuation industry in preparing for auto-consolidation relates to development and implementation of technology, as data aggregation will be the linchpin to achieving efficiency,” Mr Hogan said.
“Respondents were unanimous that common data standards would make auto-consolidation more efficient, as standards will enable funds to communicate effectively with each other and with third parties, including the Australian Tax Office.
“Overall the removal of small accounts will deliver significant scale and efficiency benefits, which will ultimately benefit superannuation fund members.”
Mr Brogden said the removal of a quarter of all superannuation accounts from the system underscored the appropriateness of the Government’s auto-consolidation reform.
For further information please contact:
Financial Services Council:
Sara Rich on +61 (0)410 397 141 or srich@fsc.org.au
