Jane Hume spoke out against employers that lock people into funds they didn’t choose and extolled the benefits of the government’s new ‘Your Super, Your Choice’ Bill in a speech delivered at the SMSF Association’s National Conference on the Gold Coast.
The Assistant Minister for Superannuation, Financial Services and Financial Technology said it was “crazy” that people are still being forced to open and pay for a superannuation account they didn’t want or need.
Hume took a thinly veiled swipe at retailer Kmart, who was recently chastised by the workplace tribunal for locking workers into using the union’s industry superannuation fund, REST. She gave the example of someone working part-time for the retailer sporadically, who already has a self-managed superannuation fund.
“Their employment agreement doesn’t allow them to have a choice of fund, so this person, even though they’re very happy with their SMSF, is forced to open an accumulation account with their employer’s default fund,” Hume said. “It’s unacceptable and inefficient. And ultimately it reduces people ability to save for retirement…”
The minister explained how the government’s ‘Your Super, Your Choice’ Bill would tackle the problem without impacting industrial relations arrangements.
“The new law will not remove the ability of workers to collectively bargain over the default fund that covers a workplace,” she said. “It doesn’t prevent a default fund being specified in the award.”
The Bill, which was introduced to the senate on February 12, proposes to extend super choice “to employees under new enterprise agreements and workplace determinations”.
An option put forward in the discussion paper to extend the super choice rule to existing employment agreements was abandoned due to compliance costs for employers. Existing agreements look set to be grandfathered if the Bill passes without amendments.
The 2014 Financial System ‘Murray’ Inquiry produced findings that showed restricting members’ choice of superannuation fund impacted savings and was of particular detriment to casual workers.
The minister noted that many people won’t take advantage of the freedom the new Bill affords them to choose their own fund due to “inertia”.
“But those who are engaged, for those who want this [and] are happy with their fund, they should have the ability to direct their employer’s contributions there,” she said. “They shouldn’t have to open yet another superannuation account, just because their employer hasn’t given them any choice at all due to an enterprise bargaining agreement. That is crazy.”