After eight long years, employees will finally be given the right to choose where they invest their superannuation savings, Minister for Revenue and Assistant Treasurer, Senator Helen Coonan, said today following the successful passage of the Government’s Choice of Fund legislation through Parliament.
“More than ever it is difficult to see why attempts to give Australian workers choice have met with such staunch and sustained opposition, from Labor in particular,” Senator Coonan said.
“Arguments from the Opposition that Australian workers aren’t capable enough to make decisions about what is, after the family home, the largest savings vehicle that most Australians have, are condescending and in line with Labor’s ‘nanny-state’ approach to government.
“Labor continually supports a ‘one size fits all’ approach to superannuation and wants to set Australians mandatory benchmarks for super savings as well as telling them where they have to invest their money – even if that means being trapped in a poorly performing fund with high fees.
“The arguments against Choice just don't stack up. We know Choice works. Many employers already offer employees choice of fund – a fact backed up by the Association of Superannuation Funds Australia (ASFA) - and choice has been operating successfully in Western Australia for many years.
“If Labor’s scaremongering is true, why is there no evidence of choice being costly for employers or of unscrupulous funds taking advantage of employees?
“A substantial education campaign will support the introduction of Choice. It will encourage people to take an interest in their superannuation and carefully consider any decision to change funds.
“Choice is about reconnecting Australian workers with their superannuation savings. Lack of control over and knowledge about where their super is, has separated some $7 billion of savings from Australian workers.
“While the ATO matches lost super with members by using tax file numbers and also operates Supermatch, a website for super funds to find lost super on behalf of their members, wouldn’t it be better if workers could control where their super savings are being invested in the first place?
“Choice, and from 1 July this year, Portability, which allows consolidation of super savings, are fundamental to handing back control of their super savings to Australian workers.
“Choice of Fund builds on the Government’s significant and far reaching reforms of the superannuation system.
“We have introduced the super co-contribution for low and middle income earners which matches personal super contributions, often dollar for dollar or more, and have reduced the superannuation surcharge to remove a disincentive for those that can save for their retirement to do so.
“There are a number of measures that improve the integrity and safety of the super system, make the system more flexible and adaptable and measures that help Australians to retire when they’re ready.
“The Government understands the importance of saving for retirement, the need to protect the super savings of Australians and the unassailable right of all Australians to make their own choice about where to invest their money.
“After all, since superannuation was introduced someone has been making a choice, it just hasn’t been the person that owns the money.”
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Choice - Implications for Employers:
- From 1 July 2005 employers will have to satisfy the new choice of fund obligations.
- In designing this policy the Government has been careful to balance the need to give employees choice while keeping employer costs to a minimum.
- Employers must give their employees choice unless employees who are covered by state awards or have entered into certified agreements or Australian Workplace Agreements that specify the superannuation fund.
- Employers will have to give their employees a Standard Choice Form which will advise them of the important matters they should consider before they exercise choice. The Australian Taxation Office will develop a form which employers can give to their employees.
- Where an employee does not choose a fund, employers will continue to make contributions to same fund as they do now, provided that fund offers a minimum levels of insurance cover. The Government will consult with the industry about the insurance obligations these funds must offer to employees.
- Employers do not have to accept a choice election from an employee if the employee has previously chosen a fund within the past 12 months or if the employee provides insufficient written evidence.
Choice - Implications for Employees:
- From 1 July 2005, employees will have a greater choice as to which superannuation fund their employer must pay their compulsory superannuation contributions.
- This will allow employees to choose a fund which provides lower fees and charges, ethical investments or other benefits they want from their fund.
- An employee will be required to provide their employer with certain information about their chosen fund and written evidence that their chosen fund will accept their employer’s contribution.