Treasury Laws Amendment (Your Superannuation, Your Choice).

The ability to choose your superannuation fund is an integral way some of Australia’s most vulnerable workers can be given the power to determine their own future when it comes to retirement. From its very beginnings, the Liberal movement has always had freedom as a fundamental principle not only to protect hard working Australians but to empower them to pursue their aspirations.

Whether you are a student working in retail to pay for your university expenses, a recent migrant working your first job in this country to build a better life or beginning to plan your retirement - this government is working to put your future back in your hands.

The amendment bans clauses in enterprise agreements and workplace determinations that force employees to contribute to a specific superannuation fund. Historically these arrangements which force employees into funds result in needless expenses that can reduce living standards upon retirement.

Financial freedom is an integral part of helping people get ahead and when it comes to allowing people to choose the super fund that works best for them this amendment represents an important next step for the Australian worker.

Any mandatory sign-up to superannuation funds often results in employees holding multiple accounts. This has the effect of duplicate fees for the same service and may often entail unnecessary insurance premiums. The Productivity Commission found that holding multiple superannuation accounts can result in a retirement balance $51,000 less than holding a single account. Australians, who are working multiple jobs, are raising a family as a single parent or in highly demanding jobs should not be held back by the very funds that are supposed to represent their interests.

Australians who are working multiple jobs are not only some of this country’s hardest workers but also some of the most disadvantaged by the status quo. Our priority is to help Australians keep more of what they earn and close out those groups who are seeking to unfairly profit from the work of others. This amendment will empower those affected by a lack of choice right now by enabling employees to contribute to the fund of their choice or the Self-Managed Super Fund they have set up. This bill is about restoring the choice that consumers have and increasing the integrity of the market by combating anti-competitive practices which only serve the interests of the few.

Research from the Super Consumers Australia showed that more than 176,000 new accounts in MySuper products fell into the bottom 25% of performers. They commented further and I quote: “These accounts join the more than one million total accounts already held in these bottom of the barrel MySuper products.” end quote.

This is simply not good enough. When employees are forced into funds that are some of the worst performing in the market we cannot remain idle. The question must be asked; who really benefits from this set-up?

Superannuation funds should never forget that they are the custodians of their member’s quality of retirement. They are the recipients of people’s trust and the income they provide is nothing short of their future livelihoods. There is no duty more important as a society than looking after Australians who have served our community who deserve the respect of being treated fairly by their super funds and having adequate savings to retire with dignity.

Unfortunately not all super funds seem to agree. The SDA recently attempted to force Kmart employees into a superannuation fund that the FWC believed would have had a negative monetary impact on employees. As a major employee of young and casual workers we have an added responsibility to those who may not have the time or resources to fight for their right to choose. Fortunately the restriction of choice for Kmart employees was struck down by the FWC as it found the forced choice of superannuation fund was detrimental to employees. However what the actions of the SDA betrays is their self-serving agenda which this amendment combats by promoting freedom of choice, greater competition and ultimately supports better results for Australians. This predatory behaviour is exploitative and fails to recognize the responsibility they have to their members. 

For young workers in the retail and fast food industry they are often required to contribute to R.E.S.T. regardless of their personal preferences, their financial goals, or their future aspirations. This bill is standing up for the youth of this country who are seen as an easy target. The Liberal Government recognises the future success of this nation as embodied in the youth. That is why this amendment is of central importance to supporting the aspirations of young Australians everywhere by giving them options to determine how their savings are invested. This is an area that I continue to work on passionately as the financial industry’s pace of change continues to affect the lives of younger people.

There have also been instances where some super fund agreements appear to include terms designed to deliberately mislead an employer as to whether their employees have a choice of fund at all.

By denying members the choice it is unfair, anti-competitive and inefficient. This Bill supports transparency by making it clear to employers that there is a right to choose which is enshrined in the law. As a government we are sending a clear and powerful signal to superannuation funds that anything less than best-of-practice will be called out and the market will penalise you for it.

As part of a broader effort to increase the engagement Australians have with their superannuation funds, this amendment is a step in the right direction because whilst we as a government can increase market integrity and enhance existing competition it is up to the individual to determine which fund works best for them by comparing existing options and the advantages different super funds can provide.

The government will continue to focus on the superannuation industry and we are taking action through the Protecting Your Superannuation Package to address multiple accounts with fees and insurance premiums reducing the retirement savings of millions of Australians.

Today there are at least 14,000 employees who are in the worst performing funds as a result of these restrictions.

This government is calling time on strong-arming working Australians into funds that over charge and under deliver. When more competition is introduced into the superannuation space these funds will have to lift their game if they want to keep their clients.

Enhancing choice in mandatory superannuation contributions will only further competition and help to drive returns for Australians. The current requirement for employers to select a default superannuation funds in lieu of employees choosing a fund remains unchanged to ensure that the retirement future of all Australians remain secure.

The superannuation industry plays an important role in the financial markets as well as being integral to healthy communities by providing for retirement. We as a government have to make sure that super funds are benefiting all stakeholders. Genuine competition remains the best way to ensure high returns for members. By increasing competition between funds the incentive to innovate is also heightened and investment into emerging technologies with beneficial applications to the superannuation industry encouraged.

Compelling evidence by a study undertaken by the Workplace Relations Policy Division in the Attorney-General’s Department highlighted that there were at least 290 agreements that restricted choice in some way to an under performing fund.

It is an anathema to the values of this country that working Australians are forced into agreements which are detrimental to their long-term future and undermines their capacity to support themselves in retirement. The prosperity of Australia is built upon a fair-go and when workers are coerced into joining super funds that are not even in the top 50% it’s time we do better.

This amendment is a perfect example of smarter regulation which puts Australian consumers first in supporting their right to compare between super funds and increasing competition. In the long-run this will help make Australian super funds world-leaders both in regards to the returns they generate for members and in the benefits of more innovative product offerings. Far from increasing red-tape which only hinders businesses and drives up the costs for consumers, the Treasury Laws Amendment will make fees more competitive and contribute to the integrity of the market. We must ensure that any regulation ultimately works for the consumer and contributes to the competitive ability of Australian businesses to operate on the international stage.

There are genuine concerns about the increased burden on employers who are required to contribute to multiple funds on behalf of employees. For small businesses there is the Small Business Superannuation Clearing House which is administered by the ATO free of charge and allows employers to make the super contributions as a single electronic payment which the Clearing House subsequently distributes to each employee’s fund. This removes what might otherwise be a difficult administrative task.

Any amendment which increases outcomes for workers and increases fair competition will only serve the Australian Community and has my full support. 

Jason Falinski MP is the chair of the House of Representatives Standing Committee on Tax and Revenue and the member for Mackellar.