Your Super, Your Choice debate heats up

The Financial Services Council and the Australian Institute of Superannuation Trustees aired some grievances about the planned Your Superannuation, Your Choice legislation.

FSC chief executive Sally Loane said while the FSC broadly supports the new legislation it submits that the bill should be amended to ensure all workers have the benefit of choice as soon as possible.

"It's unacceptable after nearly 30 years of our compulsory system that workplace agreements are still allowed to force employees into a particular super fund, and prevent employees from having their Superannuation Guarantee payments made into a fund of their choosing," Loane said.

"The prevention of choice under the current arrangements forces many Australians into new funds they did not choose, creating problems for individuals such as those who have a self-managed super funds, made specific investment choices in their existing fund or have chosen insurance levels, effectively forcing these individuals to maintain multiple super account."

The FSC cited Productivity Commission modelling suggesting an individual with two accounts for their whole working life will be 6% worse off than those with just one.

"We don't have laws which force people into particular banks, why does this still exist for super, one of the biggest assets Australians will have?" Loane said.

"The FSC is a long-standing supporter of choice in superannuation and has consistently advocated for the removal of restrictions on superannuation choice in workplace agreements."

Meanwhile, the AIST said members in the choice segment are at risk of having materially lower retirement incomes.

"Choice must only be provided in a way that does not leave consumers worse off and must operate in an environment of meaningful disclosure and consumer protections," AIST said in its submission.

"In the event the Government decides to proceed with this legislation, AIST proposes that the existing exemption remain for enterprise agreements where superannuation benefits in excess of the community standard are negotiated between the employer and their employees."

The AIST took issue with the proliferation of "little used and complex" products in the choice segment - some of which, it noted, increase fees without boosting returns.

Read more: AISTFSCAustralian Institute of Superannuation TrusteesFinancial Services CouncilSally Loane
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