The Government is committed to fixing restrictions to superannuation fund choice but will not prevent a default fund being specified in an award, according to the Assistant Minister for Superannuation, Financial Services and Financial Technology, Jane Hume.
In address at the SMSF Association’s National Conference, Hume, said there were thousands of workers that were being forced into some of the worst-performing default products as a result of restrictions on choice.
“Restricting choice of fund means there are workers who are forced to hold multiple accounts because their employer refuses to allow them to choose their own fund. Even where a newly hired worker is perfectly happy with their existing fund. Perhaps their own self-managed fund,” she said.
“That’s why we are committed to the Your Super, Your Choice Bill. We’re committed to removing the law that sanctions such restrictions, to help prevent the proliferation of multiple accounts and because it’s in members’ best interests.
“These changes have been on the Government’s agenda for a long time and are particularly important for those in the self-managed sector.”
Hume said the recent changes to cap fees and ban exit fees would prevent these new accounts from being eroded to zero though people were still being forced to open and pay for a super account they did not want or need.
“This is unacceptable. It’s inefficient. It ultimately reduces peoples’ savings for retirement. And this Government is going to fix it. Let’s be clear. This new law will not remove the ability of workers to collectively bargain over the default super fund covering a workplace,” Hume said.
“It doesn’t prevent a default fund being specified in an award. And given the current state of inertia in the system, most workers will probably stay in that default fund. But for those who are engaged with their super, if they are happy with their existing fund –– they should have the right to direct their employer’s super contributions there.
“They should not have to open yet another super account, just because their employer refuses to give them any choice at all as a result of some enterprise agreement.”