MARK RORKE:
Good morning Kelly, thanks for your time. I guess we’ll start by taking a look back a step or two and ask the question – why is superannuation so important for us to consider when we are a little bit younger?
KELLY O’DWYER:
Hi Mark, it’s great to be with you and your listeners. Look it is very, very important because at the end of the day, it’s your money. And it’s your money that the Government mandates be put aside for your retirement. So it needs to work for you and the reason it’s important is because when you do retire, you want to be able to have as much money set aside to help you live the life you want to live in your retirement. And what a lot of young people perhaps don’t focus on when they’re first starting out in their first couple of jobs is the fact that when they are put into particular default funds they can be signed up for higher administration fees, insurance premiums, and if they have more than one fund, they’re paying two lots of administration fees and two lots of insurance premiums. And that means that they are losing out on the compounding interest that they would otherwise get if they simplified it and just simply had one fund.
MARK RORKE:
You’re sounding very much like my mother did in my 20s and 30s talking about all of that but it is so easy isn’t it? Because we go from one job to another and if we don’t bring all that along effectively we can lose it or certainly lose touch with it. There are some moves in place to make a lot of this a little bit easier, can you just explain a bit about that for us Kelly?
KELLY O’DWYER:
Yes so we’ve had the Productivity Commission, which is an independent commission, have a look at this question and they’ve said that there are some problems with the existing system right now. They’ve said on average, people can lose up to around $25,000 because the system isn’t right. It’s not allowing people to only have one default fund when they start out and take it with them throughout their working life and consolidate their fund throughout their working life. And right now, there’ll be a lot of your listeners who might, for instance, be part-time at one of the big major retailers and be forced into a particular fund, they have no choice about that because it might be part of an Enterprise Bargaining Agreement or a workplace determination, and they might have another part-time job in hospitality as well and again be forced into another different fund. And as I said, they’re paying two sets of fees, two sets of insurance premiums. It’s not right, they should have choice about where their money goes and they should be able to save as much for their retirement as possible and that’s what we want to help them to do.
MARK RORKE:
Look I think all of this can only be a good idea. I’ll give you my example from a few years ago – I worked at a place for quite a long period of time. Later on decided I needed to get everything together but the problem I had was there was an address on the information where my super was held that was not at an address that I’d ever lived at or indeed anybody at that workplace had ever worked at. And the trouble I had to get all that eventually changed over was an absolute nightmare. So anything that makes this a lot better can only help us in the long run because it’s our money.
KELLY O’DWYER:
That’s right, and we want to be able to utilise technology so that people can basically on their smartphones be able to do this a lot more simply and do it at a time that’s convenient to them. Right now, there are still some processes that people need to go through that are paper-based processes where people have to write off, they’ve got to get a stamp, they’ve got to put it in an envelope. It’s pretty silly.
MARK RORKE:
Well we all love filling in forms don’t we? No…
KELLY O’DWYER:
Well I don’t know about you, Mark, but I certainly don’t!
MARK RORKE:
Look we are interested in learning a little bit more about this and superannuation in general, where would you send us off this morning Kelly?
KELLY O’DWYER:
Well I would say you can find out a lot of information from the Australian Taxation Office website or you can jump onto my website at kellyodwyer.com.au and we can direct you to the right information there as well.
MARK RORKE:
Kelly that’ll be my first job after midday when I get off the radio today.
KELLY O’DWYER:
Terrific.
MARK RORKE:
Thank you for enlightening us just a little bit more on that and look forward to catching up with you when there’s more developments in this space.
KELLY O’DWYER:
Fantastic. Cheers Mark.