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Super priorities require rethink

Super priorities require rethink

Industry Super Australia (ISA) has called for the government to get its priorities straight and fix the superannuation system’s grassroots issues rather than revising governance models in favour of bank-owned super funds.

The statement comes in response to reports that suggest the government is preparing a series of Bills that could dismantle the current governance model of industry super funds, while giving bank-owned finds a ‘leave pass’ on selected new disclosure and transparency requirements, according to ISA.

ISA chief executive, David Whiteley, criticised the timing of these Bills in the wake of ongoing revelations about poor governance, culture and conduct by the wealth management arms of Australia’s leading banks:

“Industry super funds are deliberately different and have been immune to the scandals that continue to cause significant consumer loss and hardship”.

“Member-first governance and culture is the reason industry super funds outperform bank-owned super funds”.

“The success of the trustee governance model is evident in the outperformance of the industry super sector over the bank-owned super sector.”

Mr Whiteley added that the government’s priority should be tackling the super issues most directly facing everyday Australians, including fixing unpaid super, closing the gender gap, and helping Australians to consolidate their multiple super accounts.

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Learn more about superannuation

What is a superannuation fund?

A superannuation fund is an institution that is legally allowed to hold and invest your superannuation. There are more than 200 different superannuation funds in Australia. They come in five different types:

  • Retail funds
  • Industry funds
  • Public sector funds
  • Corporate funds
  • Self-managed super funds

Retail funds are usually run by banks or investment companies.

Industry funds were originally designed for workers from a particular industry, but are now open to anyone.

Public sector funds were originally designed for people working for federal or state government departments. Most are still reserved for government employees.

Corporate funds are arranged by employers for their employees.

Self-managed super funds are private superannuation funds that allow people to directly invest their money.

How many superannuation funds are there?

There are more than 200 different superannuation funds.

What is the difference between accumulation and defined benefit funds?

A majority of Australians are in accumulation funds. These funds grow according to the amount of money invested and the return on that money.

A minority of Australians are in defined benefit funds – many of which are now closed to new members. These funds give payouts according to specific rules, such as how long the worker has been with their employer and their final salary before they retired.

Can I buy a house with my superannuation?

First home buyers are the only people who can use their superannuation to buy a property. The federal government has created the First Home Super Saver Scheme to help first home buyers save for a deposit. First home buyers can make voluntary contributions of up to $15,000 per year, and $30,000 in total, to their superannuation account. These contributions are taxed at 15 per cent, along with deemed earnings. Withdrawals are taxed at marginal tax rates minus a tax offset of 30 percentage points.

Voluntary contributions to the First Home Super Saver Scheme are not exempt from the $25,000 annual limit on concessional contributions. So if you pay $15,000 per year into the First Home Super Saver Scheme, you have to make sure that you don’t receive more than $10,000 in superannuation payments from your employer and any salary sacrificing.