“This a significant win for consumers”

Super Consumers Australia welcomes passage of bill empowering new employees to choose their own fund

Super Consumers Australia welcomes the passage of the Treasury Laws Amendment (Your Superannuation, Your Choice) Bill 2019.

The bill gives people a choice of superannuation fund, putting a dent in the creation of multiple unwanted accounts. The Productivity Commission has reported that around 1 million people may be caught in workplace agreements that restrict their choice of fund. (1)

“This is a significant win for consumers. For the first time, new workplace agreements can’t be used to deny people the right to choose a superannuation fund. People now have the freedom to pursue better financial returns and lower account fees,” says Super Consumers Australia director Xavier O’Halloran.

The amendment means fewer people will wind up paying fees for multiple accounts. The Productivity Commission estimates up to one third of super accounts are duplicates. (2)

“Today the government has achieved an important milestone in creating a fairer and more competitive superannuation system. This paves the way for the retirement boosting reforms to the default system which the Productivity Commission proposed,” says Mr O’Halloran.

In 2018 the Productivity Commission recommended complementary changes to help people make the most of their ability to choose a fund. These included the introduction of a ‘best in show’, ensuring people ‘default once’ and a tough ‘right to remain’ test for underperforming funds.

“Before we even get to the question of whether the superannuation guarantee is adequate, there are retirement boosting efficiency gains that would come from the Productivity Commission’s recommendations. Ensuring people are only defaulted once into a quality fund and cutting off the tail of underperformance would see some people half a million better off in retirement,” says Mr O’Halloran.