Bill limiting super rort to cost AMP
AMP will be dealt another blow if the Federal Government's bill forcing the embattled wealth management company to hand over 370,000 superannuation accounts with low balances to the Australian Taxation Office is approved.
The company said on Monday the bill would cost its operating earnings about $10 million in 2019 and up to $30 million by 2020.
The Protecting Your Superannuation Package was passed in the Senate last week, and if it's approved by the House of Representatives, fees for low balance accounts would be reduced and $6 billion in lost super would be returned.
AMP shares hit an all-time low this morning after it said its flagship wealth management unit would be most affected if it was forced to hand over the hundreds of thousands of super accounts.
It said the impact to AMP Capital would be "not material".
The changes under the bill would also make insurance opt-in for under 25 year olds, cap fees at 3 per cent for people on low incomes and with long-term inactive accounts, and auto-consolidate long-term inactive accounts.
Last month, the Productivity Commission released a report strengthening support to grapple with the high number of unintended multiple accounts Australians hold.
About a third of the accounts, or 10 million, are accidental multiples, the authority's investigation found.
A survey of more than 3500 Australians conducted by Student Services, the sister company to a new fund Student Super, found nearly 70 per cent of students surveyed said they simply used the default super their employer had set up for them.
Student Super chief executive Andrew Maloney said this created a pattern of Australians paying multiple fees.
"What they don't realise is that they're paying duplicate fees with each fund, which can eventually whittle their super down to nothing," Mr Maloney said.
"That's a whole decade's worth of contributions that could make a real difference to their super balance down the line."
Newcastle teen Emma Gearing was dogged by her super fund because of the opt-in for insurance premiums.
Her mother Alyson Gearing told news.com.au last year that she deposited $1200 into the girl's fund to kickstart her super, but it had all gone in less than 12 months.
"It was, 'Oh my gosh, where's it all gone?'" the 57-year-old said.
"We didn't even look at any statements for quite a while. I thought it would be a nice healthy $1500 or something. I went overseas and when I came back there were all these letters that hadn't been opened."
A superannuation statement covering 2016 and 2017 shows how Emma's meagre super balance was whittled down via fees and insurance premiums, virtually from the moment the account was opened.