The Financial Services Council and Super Consumers Australia have both welcomed the legislation, contained within the Treasury Laws Amendment (Your Superannuation, Your Choice) Bill 2019.
The bill, passed in both the House of Representatives and the Senate on Tuesday, means employees covered by enterprise bargaining agreements can’t be forced to join a new fund when they begin a new job.
Commenting that people now have the freedom to pursue better financial returns and lower account fees, Super Consumers Australia director Xavier O’Halloran called it “a major win for people”.
“Gone are the days of being forced to join a new fund just because you started a new job,” he said.
The Financial Services Council’s CEO, Sally Loane, has also weighed in, applauding the legislation as finally ending “the anachronistic practice of enterprise agreements locking workers into a specific fund and is a solid win for up to a million consumers who previously didn’t have the freedom to manage their retirement savings as they wish”.
Prior to the law being approved, the CEO said: “Many workers have been forced to choose between moving their superannuation into their employer’s specified fund or paying duplicate fees to keep multiple accounts open when they start a new job with an employer who does not offer choice – neither of which is a good consumer outcome.”
According to the Productivity Commission, up to one-third of Australian super accounts are duplicates.
It’s crunched the numbers to find that an individual who does hold two accounts over the course of their working life could be 6 per cent worse off at retirement as a result of duplicate fees and insurance premiums.
“Ensuring that every Australian can choose their own superannuation fund is an important step in the modernisation and reform of the superannuation system to ensure it delivers good outcomes for all workers,” Ms Loane continued.
Calling the reform “an important milestone in creating a fairer and more competitive superannuation system”, Mr O’Halloran said there are still many complexities that make the superannuation system difficult to navigate.
He highlighted an urgent need for trustworthy tools to help Australians understand and compare funds, “as well as properly equip regulators to guide chronic underperformers to the exit doors”.
