Government choice trumps members under super practice guide

20 November 2012
| By Staff |
image
image
expand image

The Association of Superannuation Funds of Australia (ASFA) has called the treatment of accrued default amounts under Australian Prudential Regulation Authority (APRA) draft prudential practice guide SPG 410 as akin to the Government interfering and overriding valid financial decisions made by super fund members.

ASFA said the current definition of 'accrued default amount' did not recognise the directions given to trustees of previous funds in the case of a successor fund transfer, and included members that chose the default option and gave direction to investment choice.

ASFA said the paradigm within which MySuper had been constructed - with its focus on the underlying investment options and the member - was flawed, as the focus on 'choice' and MySuper money meant a member could fluctuate between the two by virtue of daily switching.

"The current interpretation effectively denies choices that members have made with respect to their fund and/or their investment options/strategies," ASFA stated.

MySuper should have been created as a notional category or division of membership, where the person either does not participate in investment choice and is placed in the MySuper category, or does participate and is placed into the 'choice' category.

It would also allow funds to re-badge investment options, retaining the same insurance and fees across the categories.

"Accordingly, we suggest that members who have chosen to have an amount invested in a default option should be treated as a choice member and not have any amounts moved into MySuper," ASFA said.

It said the charging of administration fees for members who had split their retirement savings between choice and MySuper options was unclear, as was the application of accrued default amounts to funds with lifecycle options and multiple default options.

Read more about:

AUTHOR

Recommended for you

sub-bgsidebar subscription

Never miss the latest developments in Super Review! Anytime, Anywhere!

Grant Banner

From my perspective, 40- 50% of people are likely going to be deeply unhappy about how long they actually live. ...

11 months ago
Kevin Gorman

Super director remuneration ...

11 months 1 week ago
Anthony Asher

No doubt true, but most of it is still because over 45’s have been upgrading their houses with 30 year mortgages. Money ...

11 months 1 week ago

Jim Chalmers has defended changes to the Future Fund’s mandate, referring to himself as a “big supporter” of the sovereign wealth fund, amid fierce opposition from the Co...

1 day 19 hours ago

Demand from institutional investors was the main driver of growth in Australia’s responsible investment (RI) market in 2023, as the industry continued to gain momentum....

1 day 19 hours ago

In a new review of the country’s largest fund, a research house says it’s well placed to deliver attractive returns despite challenges....

1 day 20 hours ago