The Government has successfully negotiated an agreement with the Australian Democrats to give employees the right to choose their own superannuation fund, Minister for Revenue and Assistant Treasurer, Senator Helen Coonan said following the Prime Minister’s announcement today.
“The Government announced its intentions to provide choice of funds to employees in 1996 but for eight years employees have been denied this basic right,” Senator Coonan said.
“Substantial national benefits will flow from the introduction of choice of funds. Choice of fund will increase competition and efficiency in the superannuation industry, leading to improved returns on superannuation savings and placing downward pressure on fund administration charges.
“Choice of Fund builds on the Government’s significant and far reaching reforms of the superannuation system. Backed by an education campaign, simple and effective fee disclosure and a push for improved financial literacy for consumers, Choice hands back control of their super savings to Australian workers.
“As part of the Choice of Fund legislation the Government will establish a five person advisory committee to formulate an education campaign for Choice and the Government will commit a further $2 million to a consumer information centre. This is on top of the $14 million already earmarked for education campaigns for the introduction of Choice.
“The Government will also regulate against super funds providing ‘kick backs’ to employers or unions and one of the Government’s regulatory watchdogs will monitor and report on super fees and charges for at least five years to allow the Government to assess the impact of the Choice of Fund legislation and the Government’s fee comparison and disclosure model.
“If an employee does not choose their own super fund, an employer will be required to pay super contributions into a fund that offers life insurance cover. The Government will consult with industry before prescribing the characteristics and minimum level of insurance in regulations.
“The standard choice form for employees will also include a strong and clear warning that employees should give serious consideration to the impact on their insurance arrangements of choosing a new fund.
“Lack of choice cements the current 'set and forget' mentality that many Australians have towards their retirement. Being involved in decisions about where their superannuation contributions are paid will encourage employees to start considering their retirement income goals sooner rather than later.
“I commend the Australian Democrats for agreeing to support this long denied right to employees. Legislation to give effect to the agreement is expected to receive passage in Parliament during the current sittings.”