EMPLOYEES need not rush into super choice after 1 July 2005 when they receive their standard choice form from their employer, according to peak finance, accounting and business body CPA Australia
EMPLOYEES need not rush into super choice after 1 July 2005 when they receive their standard choice form from their employer, according to peak finance, accounting and business body CPA Australia.
Employees need to understand that choice of fund will not be compulsory for eligible employees and nor do they need to act on 1 July 2005, said CPA Australia’s superannuation adviser, Michael Davison.
“Super choice simply provides employees with the opportunity to change funds and should not be viewed as something they have to undertake,” he said.
“It is not compulsory to change your super fund. In fact, many Australians will perhaps remain with their existing funds.”
Davison highlighted the important role the superannuation fund plays for workers saving for their retirement and, as such, the significance of making sure their choices are the correct ones.
“After the home, superannuation is the most important asset many Australians will own and it is imperative that they don’t rush into making hasty decisions when super choice becomes a reality in the new financial year. There are many positives with super choice, but there are also pitfalls,” he said.
“I urge them to do their homework, just like they do when they buy their home. A lot of thought needs to be put into where they will channel their superannuation contributions and a super plan should be put into place with clearly defined goals.
“If they feel uncomfortable with the labyrinth of funds available out there, they should remain in their existing fund and improve their understanding first. Employees should first familiarise themselves with their existing fund to decide if it suits their needs or to ensure they can properly compare it with other funds.”
Similarly, superannuation funds that are not effectively communicating with their members could be left behind in the super choice race, an HR and superannuation consulting firm recently warned.
The introduction of superannuation fund choice on July 1 this year has raised the bar on member communication, according to Aon Australia’s communications practice leader, Ingrid Selene.
“Most super funds are now heavily communicating with their members,”she said. “Super choice has raised the level of competition in an already competitive environment – and many super funds are now looking for more effective ways to reach their members.”
