Say Goodbye To The Duds

Industrial agreements that restrict choice of fund will soon be a thing of the past

- Vita Palestrant

Super members are regularly encouraged to check their fund’s performance and ensure their hard-earned savings are being maximised.

If it turns out the fund is a dud, the advice is to switch to a better fund. But for 1 million employees that’s not an option at present. They are locked into a fund chosen by their employer and union as part of an enterprise agreement.

This is not the case for all enterprise agreements and industrial awards. Most employees have the right to choose their own fund. If they don’t exercise that choice, their contributions go into their employer’s default fund. The employee is free to remain with it or switch to another fund.

Last year the Fair Work Commission threw out Kmart’s union deal, in part because it forced employees to use the retail industry fund Rest, ruling such restrictions left workers worse off.

Xavier O’Halloran, head of campaigns and advocacy at Super Consumers Australia, says barring employees from picking their own fund has no place in a modern super system.

“Rest is an okay fund but there are funds that have performed better out there and [the deal] denied people the ability to choose. I can’t see any situation where that kind of trade-off and hard rule makes any sense. Consumers need to be given that choice,” says O’Halloran.

He says denial of choice has left members accumulating multiple super accounts, multiple fees and multiple insurance premiums. It also undermines competition.