Opt-out adopted for Stronger Super

The Federal Government will impose an "opt-out" requirement on superannuation fund members who do not want their multiple superannuation accounts consolidated.

At the same time as the financial planning industry fights the Future of Financial Advice (FOFA) opt-in proposal, the Government's Stronger Super arrangements specifically state that where super accounts hold balances of less than $1,000, members will have to opt out.

The Stronger Super package is in most other respects much as predicted, with MySuper products having a single investment strategy and a standard set of fees, but with funds having the ability to offer bulk discounts and more flexible arrangements to larger employers.

It states that from 2013 employers will have to make contributions for employees who have not chosen a superannuation fund by offering a MySuper product and by 1 July 2017, funds will need to transfer existing default super balances to a MySuper product.

The Government has veered away from requiring funds to hold a special MySuper licence, but trustees will be required to apply to APRA for the authorisation of MySuper products.

The Government's explanatory documentation said that the fees a member could be charged in a MySuper product would be limited to:

• an administration fee
• investment fee (including a performance-based fee)
• buy and sell spread (limited to cost recovery)
• exit fee (limited to cost recovery)
• switching fee (limited to cost recovery).

It said that, in addition, trustees would be able to charge fees for certain member-specific costs initiated by the member or a court.

On insurance, the Stronger Super package requires that MySuper products will offer life and TPD cover on an opt-out basis within 90 days.