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ISA warns on defaults and ‘inappropriate advice’
Industry Super Australia (ISA) has again differed with the Productivity Commission (ISA) and has warned against people being defaulted into only one superannuation fund citing, amongst other things, the danger of “inappropriate advice”.
In a late submission filed with the PC, ISA said it did not support members being defaulted into one fund for life.
“The risk that disengaged and low-information members will be sold, nudged or defaulted into poor quality funds by their bank, their employer or through inappropriate advice is too great,” the submission said.
“To fulfil the collective social policy purpose of compulsory superannuation, it is appropriate for government to intervene strongly to ensure members are protected from such risks. We have previously explained how this can be achieved in the context of a strengthened industrial safety net,” it said.
The ISA noted in its submission that the PC had indicated that it was trying to get rid of unintended multiple accounts by having members, new job entrants default once and then auto-consolidating accounts thereafter.
It noted that the PC had also referred suggestions that members had one account that followed them through their life, with the member taking their balance with them and rolling it over with every next job.
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The future of superannuation policy remains uncertain, with further reforms potentially on the horizon as the Albanese government seeks to curb the use of superannuation as a bequest vehicle.
Superannuation funds will have two options for charging fees for the advice provided by the new class of adviser.
The proposed reforms have been described as a key step towards delivering better products and retirement experiences for members, with many noting financial advice remains the “urgent missing piece” of the puzzle.
APRA’s latest data has revealed that superannuation funds spent $1.3 billion on advice fees, with the vast majority sent to external financial advisers.
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Industry Super Funds have had their members of each respective Industry Fund defaulted into an Industry Funds that are disengaged and have no choice to tell there employers where they want their retirement saving directed “The risk that disengaged and low-information members will be sold, nudged or defaulted into poor quality funds"
the double standards and hypocrisy of the statement is crazy they even put this stuff in the media. Effectively they are tell you the consumers that you they don't want you to have choice and just want to keep their default arrangements.