Scrapping super safety net 'would snare employers' in $1.8bn red tape
A majority of employers are concerned at the red tape cost of being forced to select a workplace super fund for employees from an unranked list of 120 MySuper funds.
New research estimates the cost to be as high as $1.8 billion nationally, falling most heavily on small business.
This selection process, promoted by bank-owned super funds, would impose a time consuming financial and legal burden on employers who are conscious of doing the right thing by their workforce according to the research.
Analysis of a December 2014 UMR survey of 550 small and medium size employers conservatively estimates:
- Australian employers would collectively spend an estimated $1.8 billion in administrative costs in considering which fund to choose, with costs ranging between $1,515 and $5,440 depending on the size of the business
- Around 80 per cent of the total red tape bill would fall on 770,000 small and medium sized businesses with up to 20 employees
- 56 per cent of employers surveyed were concerned at the costs of having to make a choice
- More than two thirds (67 per cent) of employers expressed concerned at the prospect of choosing a poorly performing fund that would ultimately leave their employees worse off
"More than eight million Australians don't choose their own super fund and rely on their employer to place them in a high performing fund. These funds are selected in a merit-based process overseen by the Fair Work Commission (FWC)," said David Whiteley, Chief Executive of Industry Super Australia.
Industry Super Australia (ISA) supports the FWC process of applying a 'quality filter' to short-list the best performing funds for employers.
"The FWC process puts competitive pressure on the super industry to deliver strong investment returns, provides a safety net for employees' retirement savings and cuts red tape for employers.
"It removes the cost and guesswork for employers and ensures the vast majority of Australians who don't actively choose their own fund are placed in a high quality, safety net fund," said Whiteley.
"Bank owned super funds are lobbying the government to scrap this process so they can bundle up business banking services for employers with super arrangements for employees – a practice that is being jointly scrutinised by APRA and ASIC.
"In 2014, the banks attempted to remove consumer protection for people needing financial advice. In 2015, they are attempting to remove consumer protection for more than eight million workers who do not choose their own super fund."
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