New super standards could save you hundreds of dollars a year
How could the upcoming strengthening of super standards save you money?
![<p>The Australian Government recently announced strengthened standards in the superannuation industry. [Source: iStock]</p>](https://agedcareguide-assets.imgix.net/news/articles/wp/peoplesmile2901.jpg?fm=pjpg&format=auto&w=550&q=65)
The Australian Government recently announced strengthened standards in the superannuation industry. [Source: iStock]
Disclaimer: the financial advice in this article should only be used as a guide. While the information in this article is accurate at the time of publication, contact a financial advisor when making financial decisions.
Key points:
- The Australian Government has recently announced strengthened standards for superannuation funds to ensure older Australians receive better support when accessing their super
- Nominating a beneficiary for your super and knowing the difference between binding and non-binding nominations could ease the stress for your family after you die
- Council on the Ageing Australia Chief Executive Officer Patrica Sparrow praised the reform and ‘to see action finally being taken to address the problem’ in current super standards
Older Australians could save an average of $650 annually with expected reforms to target APRA-regulated super funds.
Three in four retired people in Australia haven’t spoken to their super fund for financial advice according to recent Super Members Council data. However, the new standards are expected to improve how insurance claims are processed, how communication with members is maintained and how death benefits are handled.
On average, Australians retire with $200,000 dollars in their super funds. However, if a person with $200,000 dollars holds their funds in an accumulation fund account instead of a pension account when they retire, they could pay an extra $9,000 in tax.
In a joint statement, Treasurer Jim Chalmers and Assistant Treasurer and Minister for Financial Services Stephen Jones said that recently announced reforms will enhance ‘how [APRA-regulated super] funds engage with their members and put member interests at the heart of service delivery.’
APRA, also known as the Australian Prudential Regulation Authority, monitors 1,790 financial institutions, including super funds, to ensure that financial commitments made to customers in all reasonable situations are met. APRA does not regulate self-managed funds. Read this Aged Care Guide about what to consider when choosing a super fund.
Super Members Council CEO Misha Schubert emphasised why all Australians should understand more about super and how their funds could be affected as they age.
“Not knowing enough about super can lead to poor decisions, like leaving accounts inactive or withdrawing funds without proper planning,” she said.
“Making simple information and advice available to more Australians is a big missing piece of the retirement puzzle. The coming financial advice reforms will help make advice more affordable.”
Proper planning may involve nominating beneficiaries for your super if you don’t access all of the funds before you die. Learn about how much super you might need in retirement in this Aged Care Guide.
For example, with Rest Super, you can nominate a non-binding beneficiary or a binding beneficiary. A non-binding beneficiary is ‘not binding on Rest, but will act as a guide in determining who will receive your money.’ This action can be completed in the Rest Super app.
By nominating a binding beneficiary, ‘any benefit after your death will be paid to the beneficiaries nominated, as long as the nomination is valid.’ You must use a formal beneficiary form and have a witness watch you sign. However, these nominations can expire — for example, a binding beneficiary for Rest Super is valid for three years after you sign.
Not all super funds will follow the same process — contact your super fund to nominate a non-binding beneficiary or a binding beneficiary.
However, if someone hasn’t made a beneficiary nomination for their super, it may take longer for the fund trustee to determine where the remaining super should go. The trustee may use their discretion to identify appropriate beneficiaries, such as dependents.
Alternatively, the super death benefit may be paid to the executor of the deceased person’s estate and then distributed based on the deceased person’s wishes outlined in the will.
Council on the Ageing Australia Chief Executive Officer Patricia Sparrow praised the government’s efforts to strengthen the current super fund standards for Australians.
“Compassionate, clear, high-quality service is really the least we should expect from our superannuation funds every day but especially during our most vulnerable moments such as when we’re waiting for the timely payment of death benefits,” she said.
“While some funds have made improvements, it’s no secret that the customer experience has been left wanting for a long time. It’s good to see action finally being taken to address the
problem and improve the service people receive.
“COTA Australia looks forward to contributing to the consultation and ensuring the voices of older Australians are heard throughout the process.”
While it may seem to be an uncomfortable topic, discussing beneficiaries for your super is an important part of advance care planning.
Advance care planning means you can highlight your wishes for your health care when you are older, even if you become unable to make legal decisions later in life.
Documents to create in this process include wills and advance care directives/advance health directives, along with enduring power of attorney and enduring guardianship forms.
Read more about how to get started in this Aged Care Guide: What is advance care planning?
Have you nominated anyone to be a beneficiary for your super?
Let the team at Talking Aged Care know on social media.
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