Superannuation has been a pillar of the Australian workforce since it was introduced in 1983. However, employees can find it difficult to navigate the numerous superannuation funds and select a single fund throughout multiple jobs.
Employees can find themselves signing up to the superannuation fund that works best for the company instead of the fund they’ve already joined. This can result in employees having multiple super funds, each with funds in them. There are currently 500 super funds within Australia, which makes selection difficult on employees. However, a draft report by the Productivity Commission that was released on the 29th of March proposed a solution to this difficulty.
The Productivity Commission plans to ultimately streamline those workers who have four or more super funds into a single account. Productivity Commission chairman Peter Harris has explained why the Commission thinks it’s important to streamline the process of superannuation funds.
“Individuals have commented that the whole system looks like the scattering of cornflakes on the ground and it’s impossible to pick one up so I think I’ll walk right on past it,” Mr Harris said.
“It’s like when you go into a New York delicatessen and there are nine kinds of ham, six kinds of mustard and five kinds of bread, a thousand people in the queue behind you and you just want a ham sandwich.”
There are three proposed models that the Productivity Commission has put forward, with members only becoming a member of a superfund once they start their work life and stay in that fund until they leave it.
With the industry and retail superfunds in accordance that there’s no way that they’ll loosen their grip on the $474 billion default superannuation market (especially when one of the models that has been proposed is based on ‘fee based tender’), it seems like there’s not going to be much change to the superannuation funds anytime soon.