Assistant Treasurer warns super funds to lift engagement game

Federal Assistant Treasurer Stuart Robert slammed superannuation funds for not doing enough to engage members and for specifically letting the issue of multiple accounts get out of control.

Robert told this week's Financial Services Council policy breakfast that sending annual statements to members under the guise of "engagement" isn't good enough.

He was particularly critical of industry funds for not actively preventing the multiple accounts problem. "It's not a good thing," he said.

Even the government is pulling its weight, he said, adding that the ATO has to fill the gap.

The Productivity Commission estimates there are currently 10 million multiple super accounts.

Per member, this works out to be an average of 2.2 accounts, although improving from a high of 3.1 accounts in 2009.

Young super fund members aged between 18 and 25 typically default to new accounts as they move through various casual jobs. This lasts well into members' mid-40s, the Commission said in its May draft report.

Robert said the ATO has stepped in by "taking inactive accounts and actively merging them [to] find their owners."

The Government is providing transparency on how much super has been paid via myGov and Single Touch Payroll.

It is also putting changes in place so that when an employee joins a new workplace, the employer can log into the portals and see if the new recruit is an existing member of a super fund, Robert said.

Rainmaker director of research and compliance Alex Dunnin said while the ATO and Fairwork Act focus on compliance and the "how, what amount and when super should be paid," there is no official guidance on how default funds should be chosen.

He told the recent Australian Payroll Association Conference in Melbourne last week that employers aren't superannuation experts or financial advisers and should not be helping employees choose super funds or join other funds. Doing so is against the law.

A straw poll conducted at the conference found most employees (87%) are in the default superannuation fund of their employer.

A staggering number of employers (40%) "don't know" the last time they reviewed their default super fund.

Dunnin warned employers with employee on-boarding apps that contain de-facto super fund recommendations to be wary as the ATO might think "because you're promoting the app, you are endorsing the recommendations."

While work needs to be done on the consumer front in terms of superannuation education and financial literacy, Robert said the Government is doing its part and super funds need to step up.

Super funds for example, can start engaging members by asking them about lifestyle changes and if that fits with their current investment profile, Robert added.

To curb the proliferation of multiple accounts, the Productivity Commission is pushing for the creation of one default super account for people new to the workforce or do not already have a super account.

SelectingSuper was a sponsor of this year's Australian Payroll Association Conference.

Read more: SuperannuationATOProductivity CommissionStuart RobertAustralian Payroll AssociationAlex DunninFinancial Services CouncilFSCSingle Touch Payroll
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