Legislation giving Australians the power to choose their own superannuation fund, instead of being forced into a fund because of enterprise bargaining agreements, today passed the Senate.
The Treasury Laws Amendment (Your Superannuation, Your Choice) Bill 2019 will allow around 800,000 Australians to make choices about where their hard-earned retirement savings are invested, representing around 40 per cent of all employees covered by a current enterprise agreement.
The Bill addresses the findings of the Financial System Inquiry and the Productivity Commission Inquiry into the efficiency and competitiveness of the superannuation system which found that this reform was ‘much needed’ and that denying choice of fund can discourage member engagement and lead to them paying higher fees.
This reform is also supported by a recent decision of the Fair Work Commission which found that it was detrimental to employees to restrict them from being able to choose their own superannuation fund. Specifically, the Fair Work Commission determined that extending choice of fund to employees who were previously denied choice will prevent them from unnecessarily ending up with multiple superannuation accounts “with all the inconvenience and additional administration costs that this involves”.
These changes also build on the Government’s earlier reforms which protect superannuation accounts from being eroded through the capping of fees on low balance accounts and requiring insurance to be provided on an opt-in basis for new members under 25 years of age.
With around 16 million Australians having a superannuation account and around $2.9 trillion worth of superannuation savings, the Government will continue to ensure that the superannuation system is delivering for all Australians.