Parliament should amend the Treasury Laws Amendment (Your Superannuation, Your Choice) Bill 2019 to ensure all employees have the benefit of superannuation choice, the Financial Services Council (FSC) has said.
FSC chief executive Sally Loane said: “It’s unacceptable after nearly 30 years of our compulsory system that workplace agreements are still allowed to force employees into a particular super fund and prevent employees from having their superannuation guarantee payments made into a fund of their choosing.
“The prevention of choice under the current arrangements forces many Australians into new funds they did not choose, creating problems for individuals such as those who have a self-managed super fund, made specific investment choices in their existing fund or have chosen insurance levels, effectively forcing these individuals to maintain multiple super accounts.
“Multiple independent inquiries have found that Australians are significantly worse off at retirement if they are required by outdated laws to keep multiple super accounts.”
The FSC also highlighted modelling from the Productivity Commission that indicated individuals with two accounts throughout their working lives would be 6 per cent worse off upon reaching retirement than individuals with only one account.
These figures indicated this situation could result in a superannuant being $51,000 poorer in retirement.
“We don’t have laws which force people into particular banks. Why does this still exist for super, one of the biggest assets Australians will have?” Loane pointed out.
“The FSC is a long-standing supporter of choice in superannuation and has consistently advocated for the removal of restrictions on superannuation choice in workplace agreements.”
The industry body’s position regarding choice of fund echoes previous calls highlighting the importance of strengthening this fundamental element contained in the Australian retirement savings system.