The SMSF Association has put its weight behind the Government’s proposed legislation to extend choice of superannuation fund, arguing it will increase consumer engagement, improve efficiency and help underpin a more competitive system
Association Chief Executive Officer/Managing Director Andrea Slattery says Superannuation Guarantee contributions are forgone income by employees, and as such each individual member should have the right to choose which fund should save and invest on their behalf.
“Giving people the right to choose where their superannuation contributions are made will give them the opportunity to become more engaged and informed about their retirement savings. It will allow them to select a superannuation fund that they believe best suits their circumstances and retirement savings goals.
“For those who do not want to exercise choice, default MySuper fund arrangements will cater for their needs.”
She says that the Association firmly believes choice of fund will improve the system’s efficiency because of the likely drop in the number of superannuation accounts people will hold. At present, it is believed that most individuals have at least three accounts.
“This will help reduce the amount of fees and insurance premiums deducted from an individual’s superannuation, boosting their retirement income over the long term.
“In addition, allowing all employees choice will reduce the need for people to transfer funds from their default fund account to their account of choice (such as an SMSF, retail fund or another industry fund), minimising costs and complexity.
“Choice of fund will also ensure that all funds are on a level playing field in acquiring and retaining members, ensuring healthy competition in the market place that will drive better outcomes for members.
“Under the present system many employees are ‘trapped’ in their default fund and can’t leave if they are unhappy with their fund’s fees or performance.
“Allowing fund choice for these employees will ensure that they can find a fund that meets their needs, increasing competition, a positive outcome for the superannuation sector to ensure it meets its primary objective to provide retirement savings for all Australians,” Slattery says.
