The SMSF Association has applauded the federal government’s proposed move to extend choice of superannuation fund via legislation.
In declaring its support, the professional body claimed the initiative would result in a more competitive superannuation system due to improved efficiency and greater consumer engagement with retirement savings.
“Giving people the right to choose where their superannuation contributions are made will give them the opportunity to become more engaged and informed about their retirement savings,” SMSF Association chief executive Andrea Slattery said.
“It will allow them to select a superannuation fund that they believe best suits their circumstances and retirement savings goals.
“For those who do not want to exercise choice, default MySuper funds arrangements will cater for their needs.”
According to Slattery, efficiency gains would be made under choice of fund as it would reduce the likelihood of people ending up with multiple balances in numerous funds.
Avoiding that scenario would mean individuals would have a larger amount of money dedicated to funding their retirement, she said.
“This will help reduce the amount of fees and insurance premiums deducted from an individual’s superannuation, boosting their retirement income over the long term,” she revealed.
“In addition, allowing all employees choice will reduce the need for people to transfer funds from their default fund account to their account of choice, such as an SMSF, retail fund or another industry fund, minimising costs and complexity.”
She cited competition within the superannuation industry as another benefit stemming from changing the rules governing choice of fund.
In particular, it would help eliminate situations where individuals felt trapped in a default fund without the ability to switch, she said.
“Allowing fund choice for these employees will ensure that they can find a fund that meets their needs, increasing competition, a positive outcome for the superannuation sector to ensure it meets its primary objective to provide retirement savings for all Australians,” she said.