The public and often divided debate on super fund choice has been on the boil for more than two years. It has survived two federal elec-tions; been endorsed by the groundbreaking Wallis inquiry into our financial system; and had the scrutiny by the now defunct senate se-lect committee on superannuation.
The public and often divided debate on super fund choice has been on the boil for more than two years. It has survived two federal elec-tions; been endorsed by the groundbreaking Wallis inquiry into our financial system; and had the scrutiny by the now defunct senate se-lect committee on superannuation.
The legislation is now teetering on the brink of being debated in the senate. Those who oppose the Government’s choice model have run down the path of investment choice path and are not prepared to speculate on when fund choice should become a reality.
There has, however, been at least one intellectual watershed on choice. This was created by the June 1999 release of The Keys to Su-perannuation Choice discussion paper by the Financial Services Con-sumer Policy Centre (FSCPC). In the words of the centre’s director, Chris Connolly: “it is a non-profit consumer research and advocacy organisation” that conducts “policy research and advocacy on national issues affecting low income and disadvantaged consumers of financial services.”
Connolly’s foreword to the 60 page discussion paper comes from the same commonsense perspective as the Wallis inquiry. It is simply that: “choice of fund will play a positive role in enhancing the right of consumers to choose a fund which best suits their circum-stances”.
Importantly, however, FSCPC says choice should only proceed after “a number of important consumer issues have been addressed”.
There is a strong message in the executive summary to the FSCPC paper – this consumer body supports a choice of fund regime provided the issues of education, disclosure, consumer protection and complaints are addressed.
Should the choice of fund regime be preceded by investment choice? A report in the Weekend Australian (12 June 99) gives a single and une-quivocal message in the negative.
According to the principal author of the FSCPC discussion paper, Khaldoun Hajaj: super choice is a “consumer right”. He then pro-ceeded to say: “the tension that had emerged over super choice versus investment choice was irrelevant. We should have both.”
So it seems that the Government will be relying on the Australian Democrats to achieve some sort of choice outcome. The Democrats will no doubt use the FSCPC paper as a gauge to measure the integrity of the protective mechanisms in the Government’s policy.
Once the dust settles on GST, there should be ample time for negotia-tion on the sort of reform that the consumer policy centre supports.
A negotiated super choice package should give employers and employees clear guidelines and a time frame to negotiate a choice outcome. It should also embed a system of disclosure that will protect consumers.
Finally, the negotiations on choice should produce and education strategy that will fill the void that has been identified in the con-sumers’ paper. To leave the choice issue to languish would be an un-desirable outcome for super funds and consumers alike.
IFSA Conference
The many issues underlying superannuation fund choice will be raised at a number of the sessions at this year’s IFSA conference. It is im-portant that you not miss the opportunities to explore these impor-tant matters.
Also in vogue will be the outcomes from the final Ralph Review Report. The con-ference will give delegates the chance to have their say on business tax reform which will impact retail and wholesale investment management, and the operations of life insurance and reinsurance companies.
