AUSTRALIA - A 'secret' loophole allowing unemployed workers to be shifted to more expensive superannuation funds has been branded "unconscionable and outrageous" by senator Nick Sherry, the superannuation minister.
Speaking on Australia's 2SM radio, senator Sherry said: "It is unfair and, indeed, it's unconscionable and is outrageous. As I understand it, there would be hundreds of thousands of Australians who - if they're [made unemployed], for example, not only have they lost their job, their superannuation fees could double as well."
Sherry said he ordered the superannuation industry regulator to conduct an urgent investigation, and added the government would act swiftly to halt the practice, which had been buried in the small print of fund agreements.
"When we've got the report on the details of who is doing this - it's been kept secret until now - we'll then work out the most effective way to change the law to put a stop to this sort of bad behaviour," he added.
Although fees would rise by only a percentage point or so, Sherry warned on a compounded basis over the lifetime of a worker, this could lead to a potential loss of thousands of dollars of retirement income.
Sherry also said the Australian superannuation industry was in need of "an essential renovation".
He said: "There are other contentious practices around fees in superannuation that do hurt the retirement savings of Australians, and we intend to carry out a renovation of these, the way the system's operating and, in particular, some of these very bad fee practices which are clearly not in the best interests of the member."
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