Is the Australian superannuation industry ready for the implementation of choice of fund from July 1?
Arguably not.
It does not matter that the Federal Government on March 14 released the regulations which will govern choice. What matters is that the new choice regime represents a complex regulatory environment and that too many employers are insufficiently informed about what is expected of them.
Major organisations such as AMP, Mercer and Russell have been working assiduously to ensure their clients are appropriately informed about their obligations in the new environment, but there are many more employers who are not party to these education programs and are likely to be found wanting.
The Government must know this and, on that basis, should ensure that appropriate transition mechanisms are put in place, including having the Australian Taxation Office (ATO) adopt an educative rather than enforcement approach for at least the first 12 months of the new regime.
As has been vociferously pointed out by the Federal Opposition, the new regulations impose considerable responsibilities and penalties on employers. Any move by the ATO or the regulators to apply penalties within the first year of choice would, by definition, be highly counter-production.
At the same time as releasing the new choice regulations, the Government also flagged its intention to extend the new choice regime to state award workers by introducing legislation which will effectively over-ride state industrial relations jurisdiction.
While there is nothing inherently wrong with introducing choice to the state award environment, there are inherent dangers in seeking to do so by tying superannuation into the Government’s broader agenda to radically change industrial relations in Australia and bring it under a single jurisdiction.
Notwithstanding the Government’s Parliamentary majority, its industrial relations reform agenda represents a radical departure from that which has traditionally existed in Australia and one which will be strongly resisted by influential sections of this nation’s labour movement.
Given the traditional linkage which exists between unions and industry funds, there is a real risk that any industrial relations confrontation will spill over into the financial services arena.
For this reason the superannuation industry would be well-advised to press both the Federal Government and the states to resolve jurisdictional issues with respect to choice at government level rather than via an industrial relations battlefield.
The issue of self-funded retirement is too important to become mired in competing political and industrial ideologies.
Mike Taylor, Editor
