The leading seniors’ advocacy body, COTA Australia, has today welcomed the passage of superannuation reforms by the Senate, which if passed by the House next week will mean the compulsory consolidation of inactive low balance superannuation accounts by the Australian Taxation Office (ATO), and ban exit fees and cap other fees on low balance accounts.
However COTA expressed disappointment that proposals to remove compulsory insurance cover for low balance accounts and under 25s, unless they elect to have it, were excluded from the Bill.
Chief Executive of COTA Australia, Ian Yates, commended the Government for working with other parties in the Senate to pass the Bill, which will save millions of Australians many thousands of dollars in savings and strengthen the integrity of the superannuation system.
Under the changes, superannuation members low balance and inactive accounts will be consolidated by the ATO, which it is estimated will increase the superannuation balances of three million Australians by an average of $2000 each.
“The growth in multiple low balance superannuation accounts which are then eroded in value by insurance premiums and administration fees has been a scandalous blight on the superannuation system and has undermined the integrity and reputation of compulsory superannuation,” Mr Yates said.
“The transfer of low-balance inactive superannuation savings by the ATO will substantially increase the accumulated savings of millions of superannuation members resulting in higher retirement incomes,” said Mr Yates.
The legislation will also see exit fees banned and excessive fees on certain accounts capped, a move which is estimated to save 7.2 million Australians hundreds of millions of dollars in the first year alone.
“The ban on exit fees is an important step forward in improving the portability between products and funds across the superannuation system and is strongly supported by COTA.”
While COTA is supportive of the legislation, it regrets that the Government’s proposals to allow people under 25 or with low account balances to be exempt from compulsory insurance were not supported by the Greens and Labor and urges Parliament to reconsider the exclusion of these proposals when they are presented in a stand-alone Bill in the House next week.
“In the meantime, it is critically important that the Bill that passed the Senate last night is promptly ratified in unamended form in the House of Representatives early next week and we call on all parties and independents to commit to doing this,” Mr Yates said.
Media contact: Ian Yates 0418 835 439, Bronte Kerr 0411 676 269