Senator the Nick Sherry, Minister for Superannuation and Corporate Law, today announced the release of a two-part discussion paper on the implementation of the Government's superannuation clearing house measure and possible initiatives to reduce the number of lost super accounts.
In the 2008-09 Budget, the Government announced funding of $16 million over three years to deliver on its election commitment to establish an optional superannuation clearing house facility to cut the red tape burden on businesses across Australia.
"The Rudd Government is committed to cutting red tape and reducing the costs for small businesses across Australia. One of the costs small businesses face is in meeting the requests of their employees to have their super paid into many different funds.
"For many employers, the process of complying with the choice of superannuation fund rules not only imposes costs but can divert resources away from their core productive business activities."
"Today's announcement is the next step in delivering on this important election commitment."
"The optional clearing house facility will help relieve this burden by allowing employers to pay their contributions to a single location and will be cost free for employers with fewer than 20 staff," Minister Sherry said."
The clearing house will also manage employers' obligations under Superannuation Choice, including the time-consuming task of checking details entered on the Choice form and disbursement of contributions to the nominated funds.
The key issues identified in the paper include the division of responsibilities between employers and the clearing house in relation to the Superannuation Guarantee and choice of fund obligations, whether the clearing house facility should be contracted to a single provider or multiple providers, and the regulatory framework for the clearing house.
The second part of the paper canvasses possible initiatives to improve the operation of the lost members' framework. Labor has already committed to examining the use of a rolling together mechanism for lost accounts.
"The current lost members' framework has been ineffective in stemming the growth of lost superannuation, with both the number and value of lost accounts rising sharply between 2001 and 2008 to an incredible 6.4 million lost accounts worth $12.9 billion."
"The growth in lost accounts has continued unabated for the last decade, with initiatives such as SuperSeeker, SuperMatch and direct "write out" campaigns unable to stem the growth," Minister Sherry said.
Key shortcomings of the current framework include the broad definition of a lost account, poor reporting and information sharing, unclear trustee obligations to lost members and a lack of member engagement with their superannuation.
The discussion paper is available on the Treasury website at www.treasury.gov.au. The Government is inviting feedback on the issues raised in the paper by 19 December 2008. Comments should be sent to chsuper@treasury.gov.au.