EMPLOYER and business groups have expressed concerns over the possibility of extra costs associated with the introduction of superannuation fund choice in July 2005
EMPLOYER and business groups have expressed concerns over the possibility of extra costs associated with the introduction of superannuation fund choice in July 2005.
The Australian Chamber of Commerce and Industry (ACCI), for example, recently sought an assurance from government that the introduction of super choice would not force employers to make payments more frequently than they are currently obliged to.
“Fund choice is sensible policy, but should not be used to compel employer payments more frequently than each quarter,” said Peter Hendy, ACCI chief executive.
“The possibility that rules set by a fund chosen by an employee could require employers to sign up to payments more frequently than each quarter needs to be ruled out.”
For the first decade of compulsory employer funded superannuation, employers were required to make payments at least annually.
In 2003, business groups generally agreed to legislative changes that compelled employers to make payments at least quarterly, but they’re strongly opposed to being forced to make payments more frequently by employee fund choice.
Commenting on a federal Treasury consultation paper into superannuation choice regulation, Hendy said employers would be disadvantaged if super choice meant changing the frequency payments into an employee’s fund of choice.
“For smaller employers, making payments more frequently than each quarter could have adverse cash flow implications given that the compulsory employer payments are now set at 9 per cent of payroll,” he said.
Philippa Smith, CEO of the Association of Superannuation Funds of Australia (ASFA) welcomed the consultation paper, but said the inclusion of RSAs (Retirement Savings Accounts) in the default fund category was a point of concern. All default funds should offer a life insurance component and RSAs do not, Smith said.
Choosing the right fund
When choosing your super fund, don’t be swayed by glossy brochures, the ideology of the people operating the fund or even whether the financial advisor offers you a nice cup of coffee when you meet them. There’s too much of your money at stake to not take the job of choosing your super fund very seriously. The following checklist is a good starting point for enabling you to meaningfully start comparing super funds with confidence:
1. Are you comfortable with the organisation and people running the super fund?
2. Do you understand how the fund works?
3. How many investment options do you need?
4. Are the investment options flexible enough to suit your needs?
5. Is the investment performance reliable and reasonable?
6. Does the fund offer enough insurance options to suit your needs and are they competitively priced?
7. Does the fund give easy access to information about your investments, say, through a website?
8. Does the fund have a reasonable range of extra benefits and services that you will actually use?
9. Is the fee package reasonable?
10. Do the fund member statements make sense and are they delivered promptly?
Source: SelectingSuper
