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Super Fund, Super Choice |
Parliament has passed legislation allowing for employees to choose their own Super Funds. |
After eight years of political debate, and on the third try, the Government has finally achieved its goal to allow employees to choose their own super fund. This legislation will come into effect as at July 1, 2005. |
This will provide greater flexibility for employees to be able to choose which Super Fund they wish to invest their money in. Employers will no longer be allowed to arbitrarily choose the Super Fund for their employees and place it in those funds. The opposition to this legislation comes from those concerned that employees will not be able to make an informed choice as to where to put their money for example because:
- the Superannuation Tables that disclose the fees and charges that are payable to each fund will be in percentages and not dollars;
- employees will not be educated enough on the mechanics of superannuation;
- the average costs to employees could actually increase rather than decrease as a result of the changes.
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| The Bankers Association dismisses this claim believing that the increase in choice for consumers will lead to lower fees as a result of the stiffer competition. |
Each employee may not be able to choose his or her own Super Fund in certain circumstances. If employees are covered under State Awards or Workplace Agreements that nominate the Superannuation Fund, then employers are entitled to place their employees' Superannuation in those nominated funds. Employees are not under an obligation to choose their Super Fund. They can allow their Employers to nominate the Super Fund and to continue paying into that one. In choosing their Superannuation Fund, employees must stay with this fund for at least 12 months and also provide evidence to their employers that the fund will accept the employees contribution. |
This change has important implications for employers and has the potential to become an important consideration in the way employers run their business. |
peter.mcnamara@cmlawyers.com.au
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