01.Government announces Superannuation Consumer Centre
CHOICE has welcomed the Federal Government’s announcement today of $10 million in seed funding for the Superannuation Consumer Centre.
The centre was first proposed by CHOICE to the 2009-10 ‘Cooper’ Super System Review to provide critical support for Australians navigating the complex retirement income system.
“Today’s announcement will provide much-needed assistance for consumers especially those in the ‘retirement risk zone’,” says CHOICE Chair Jenni Mack.
“We commend Minister Shorten for recognising the importance of advocacy whether for disadvantaged groups – people with disabilities, young people, women – or for consumers generally,” says Ms Mack.
Financial Services and Superannuation Minister Bill Shorten has acknowledged the work done by CHOICE Chair, Jenni Mack, in seeing to the creation of the Superannuation Consumer Centre.
He also emphasised the important role the centre will play in advocating for consumers.
“Industry support for the centre provides an opportunity for the superannuation industry to demonstrate its commitment to ensuring the interests of superannuation consumers are well represented in the development of reforms and will help to ensure that the centre is well resourced to perform this important role,” Minister Shorten stated.
A world-first independent funding model
The Centre will be funded under an innovative model designed to deliver independence and resources to the organisation for decades to come. Under the funding arrangement, the government will provide a one-off grant of $10 million to the Centre on the condition that it is matched by the superannuation industry.
This money will go into an independent fund which will earn interest over time. The incomes derived from this fund will resource the Centre. The model exhibits a unique collaboration between stakeholders, including consumers, government and industry.
Gordon Renouf, the Deputy Chair of the Consumers Federation of Australia praised the independent funding model of the Centre, “the idea of building a substantial capital fund through government and industry contributions and funding the centre on an ongoing basis through interest from the fund will guarantee the Centre can operate independently without interference from either government or the industry” said Mr Renouf.
Consumer groups praise the centre
Other Consumer groups have also welcomed the announcement, highlighting the importance of consumer advocacy in the Superannuation industry.
“Superannuation is one of the biggest investments many Australians will make in their lifetime. At the same time, Superannuation products can be confusing and the market can be hard to navigate. There is a clear role for an independent body to promote simplicity and solutions that work for consumers in policy making, as well as encouraging consumer engagement”, said Catriona Lowe, co-CEO of Consumer Action Law Centre.
COTA chief executive Ian Yates also praised the Centre and its funding arrangement, “the Superannuation Consumer Centre can help many Australians get a better understanding of what their retirement will look like, and the income they will have when they finish work. COTA is happy that the funding model means that the Centre will be completely independent”
A role for CHOICE
CHOICE has convened a committee of prominent individuals including Allan Moss AO, Steve Bracks AC and former ASIC Chairman Tony D’Aloisio AM to help establish the Centre, and has enlisted the assistance of a range of pro bono partners including Oliver Wyman and Mercer.
The CHOICE-led committee will work with industry to raise matching funds and together will submit a comprehensive proposal to the government for the centre.
CHOICE hopes the Superannuation Consumer Centre will:
- advocate for consumers’ interests
- provide information to consumers about new products on the market including warnings where appropriate
- directly help consumers with some superannuation problems, and
- build an interactive web hub where superannuation consumers can share and receive expert advice.
More good news on superannuation
The government has also announced further superannuation reforms designed to protect unused superannuation accounts from being eroded by fees. Under the current system a 20 year old with $1,000 in super can unknowingly have their super savings eroded to just $418 after five years by a range of fees and deductions.
Australians have almost 3.4 million ‘lost’ superannuation accounts holding approximately $17 billion in funds.
Under the new reforms, inactive accounts and accounts of uncontactable members will be transferred to the ATO if they hold $2000 or less (currently this threshold is $200), or after 12 months (currently five years). The ATO will pay the accounts an interest rate equivalent to the inflation rate from 1 July 2013.
The reforms to the transfer of lost accounts to the ATO will take effect from 31 December 2012.
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