The SMSF Association has declared the fundamental right of all employees to have the ability to choose their own super fund, including an SMSF, should be an integral part of the retirement savings system.
“Giving all employees the option to select their own fund is an essential element in promoting an efficient and competitive super sector,” SMSF Association chief executive John Maroney told a Senate Economics Legislation Committee hearing earlier this week.
“It’s the association’s understanding that there are many SMSF trustees who are adversely affected by the fact they cannot choose where their superannuation guarantee (SG) contributions go, including their own SMSF.
“A common scenario for many SMSF trustees, of which about 60 per cent are 55 years or older, is to be working in part-time jobs under an enterprise agreement while transitioning to retirement.
“The fact that they can be employed under an enterprise agreement that can dictate where their SG contributions go is unfair and inefficient, and needs to be changed.”
Maroney warned it was not just SMSFs affected by lack of choice, which had wider repercussions.
“Arrangements that fail to give employers or employees any choice as to where their SG contributions are made have widespread negative consequences, of which the most significant is account proliferation, resulting in multiple sets of fees and insurance premiums that erode super balances,” he noted.
In the association’s appearance before the Senate inquiry, Maroney also contended that opening up choice of fund to all employees would increase the efficiency of the system by removing the need for employees, who were constrained by an enterprise agreement, to roll over their contributions to their fund of choice.
“This is often the case for employees who don’t have unconstrained choice of super fund, but wish to control their own super through an SMSF,” he said.
Choice of fund would also improve competition in the $2.3 trillion super industry, he added.
“Overall, our association is concerned about having the right settings for the broader super system and we see choice of fund as a key element of an efficient and effective Australian super system.”
Choice of fund has been a long-held policy position of the SMSF Association.
The Senate Economics Legislation Committee is conducting an inquiry into the Treasury Laws Amendment (Improving Accountability and Member Outcomes in Superannuation Measures No 1) Bill 2017 and the Superannuation Laws Amendment (Strengthening Trustee Arrangements) Bill 2017.