OF 5.7 MILLION Australians that will have a statutory right to choose their own super fund following the introduction of choice of fund in July this year, a recent report has found that around 8 per cent, or some 456,000, will exercise that choice
OF 5.7 MILLION Australians that will have a statutory right to choose their own super fund following the introduction of choice of fund in July this year, a recent report has found that around 8 per cent, or some 456,000, will exercise that choice.
Released by The Association of Superannuation Funds of Australia (ASFA), the report found that while both retail and industry funds will gain market share from the closure of certain corporate funds, fund members must be wary of unlicensed financial advisors.
ASFA said that the Australian Securities & Investments Commission (ASIC) needed to remain vigilant as there were already anecdotal reports of “mis-selling” under way.
“The biggest risk appears to be advisors mis-selling people into SMSF (self-managed super fund) arrangements where the client involved doesn’t have the skills, time or adequate savings to make this viable,” said Philippa Smith, CEO of ASFA.
“Fortunately most instances of mis-selling so far seem to be isolated cases driven by individual advisers, not co-ordinated marketing campaigns by financial institutions.”
The report, Implications of choice of superannuation fund legislation for members, employers and funds, warns employers to be careful who they allow to provide educational or marketing material in the workplace to their employees.
“Consumers would be best advised to ‘look in the fridge before you go shopping’. Weigh up the benefits of what you have in your current fund against what is offered, and ask plenty of questions until you are satisfied,”Smith said.
Most public sector employees and many employees in large organisations covered by industrial agreements will be exempt from choice of super fund.
Employers whose employees are not exempted from choice of fund will almost certainly be making contributions to more funds from 1 July.
A very large employer might be contributing to around 50 super funds on behalf of employees.
The report found that SMSFs look set to gain from choice, with retail funds appearing most likely to lose members.
A higher proportion of retail fund members also plan to change funds, for a variety of reasons, ranging from fund performance to fee levels, according to recent surveys.
