The PYS package, effective today, has forced the sector to consider changes to fee structures and group insurance premiums.
With the package set to cap the amount of fees that can be charged to low-balance members and divert low-balance accounts deemed to be dormant for longer than 16 months to the Australian Tax Office, some super funds face losing a significant portion of ongoing revenue.
Several super funds, such as BUSSQ, have increased administration fees in response. Meanwhile others, like AustralianSuper, have hiked insurance fees.
Both funds say the decision to charge members more for services they already receive are a direct result of implementing the package, bringing the efficiency of the reforms into question.
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But others, such as millennial-targeted Future Super, dispute this.
According to founder Adam Verwey, many in the sector have missed the point of the reforms.
"The PYS reforms are meant to be sending a strong signal to the super industry that they need to do more to protect the savings of younger and lower-balance members," Verwey says.
"Yet, Future Super seems to be one of the very few super funds who are responding by further reducing fees and costs. In fact, most big industry funds seem to be increasing their fees in response to the reforms."
Future Super members with an account balance lower than $1000 do not pay a dollar-based admin fee currently, and with the PYS changes designed to protect the super of Australia's low income earners, Verwey says Future Super is doubling down. Come July 1, the fund will extend the policy to cover accounts with balances lower than $6000, saving many members $96.30 a year.
"Future Super aims to be an ethical fund, not just in how we invest the savings of our members but also in how we operate," he says.
"While the super industry has previously lobbied against member protection rules, Future Super has always worked to protect the savings of its younger and lower-balance members. We have never charged set dollar admin fees on low-balance members, and we have never charged members for insurance that they never asked for."
The move comes despite Rainmaker analysis of APRA data revealing Future Super has one of the highest proportions of members under the age of 25, at 19%.
While not specifically targeting young people, the PYS provisions for low-income members will force many funds with high proportions of young members to reconsider their fee structures.
People under the age of 25 contribute around 1% to the total Australian super market, while accounting for fewer than 15% of members, according to Rainmaker.
Sargon general counsel Fiona Borrelli says the changes are complex, adding that the timeframes for implementation are challenging.
Those difficulties however, will not see fees rise for any of the super funds using the master trust of Sargon subsidiary Tidswell, despite no less than four "millennial" funds doing so.
One fund existing as a sub-plan of the Tidswell Master Superannuation Plan, Student Super, confirmed its readiness for the legislation to Financial Standard.
Student Super chief executive Andrew Maloney revealed only three members of the fund are expected to be impacted by the legislation.
While he noted more members may be affected in future, Maloney said the fund expects most accounts to remain active.
"We are lucky however, as Student Super is a choice fund, so our members have actively chosen to join," Maloney says.
Mercer head of corporate super Darren Stevens agreed the reforms have put the sector under pressure, but Mercer's Super Trust wouldn't increase funds as a result. He also confirmed members of the $670 million sub-plan Virgin Super would not face a fee hike.
"Due to the tight timeframe given to implement PYS, the industry as a whole is under pressure. Administration services are being stretched with increased calls and admin requests," he says.
"Mercer is not increasing fees for Virgin Money Super or the Mercer Superannuation Trust as a result of the PYSP regulatory changes."
The diverse response comes after APRA was forced to remind the super sector to "do the right thing" by members when recovering costs associated with implementing the reforms. The prudential regulator said it expects responsible super entities to recover the costs "in a manner that is in accordance with its duties to members."