Council of Small Businesses of Australia (COSBOA) chief executive Peter Strong said super funds could improve member engagement if the Government gave the go-ahead to combine tax claims with super contributions.
"There's actually a problem here with the collection of money – it's inhibiting communication, it's inhibiting the development of new products," he said.
He said if tax returns included superannuation, members would be forced to make choices about where their money went and become more engaged.
"It's because they (members) don't have to do anything.
"They don't actually get involved in sending their money off and the funds have no motivation at all because they get the money anyway," he said.
Rather than employers choosing a person's initial fund, members would be free to make the choice at tax time and be forced to find out more information.
Competition would mean super funds would have to make a real effort to engage with members on issues important to them.
"They'd have to communicate with the people and tell them what's happening with their money, and all of a sudden people would take a much bigger interest because they're making the decision about where their money goes – it's not something they see on their pay advice which confuses them," he said.
It would mean that tax dodgers who wanted their super would have to re-enter the system, Strong said, as well as cut union involvement in super.
The Australian Tax Office would get "first call" on companies that went "belly-up", which would better protect super funds, he said.
Super funds may not like the idea because unclaimed super would remain with the ATO, according to Strong.
