The Treasury Laws Amendment (Your Superannuation, Your Choice) Bill was passed on Tuesday, allowing an estimated 800,000 Australians, or around 40 per cent of all employees covered by an EBA, to choose their fund.
The Ffnancial system inquiry and the Productivity Commission inquiry into the super system had previously recommended the reform, finding that denying choice of fund could discourage member engagement and lead to higher fees.
The Productivity Commission had found that a full-time worker with multiple accounts over the course of their working life could be 6 per cent worse off (or $51,000) at retirement as a result of duplicate fees and insurance premiums.
It had also found there were 10 million “zombie” super accounts costing Australians $2.6 billion each year in excess fees and insurance costs.
The Fair Work Commission had also concluded it was detrimental to employees to restrict them from being able to choose their own super fund, ruling that extending choice to individuals who were previously denied it would prevent multiple accounts.
Industry bodies including Association of Superannuation Funds of Australia (ASFA) and Financial Services Council (FSC) expressed support for the bill.
FSC chief executive Sally Loane said there had been no justification for preventing choice of fund previously.
“This legislation finally ends 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,” Ms Loane 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.
“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.”
She added the FSC had supported Centre Alliance senator Rex Patrick, who had amended the bill to require APRA to review the impact of the reforms in due course and report to the government.
