POWERED BY MOMENTUM MEDIA
(July-2003) Trustees still waiting for the big changes
Trustees are constantly being advised that big changes are just ahead. The recent parliamentary session was in this respect at least, no different. Despite having prepared themselves over a period of several years for mandated choice-of-fund, the Government’s preferred legislative model is still in legislative limbo.
Regardless of legislative developments, trustees of not-for-profit funds, be they corporate or industry funds, have been preparing for choice for some time. These trustees do not make plans and decisions based on the assumption that their members are a captive market. Already, many employers allow their employees to choose a fund, and most industrial awards specify more than one fund. So choice, as trustees are very well aware, is a reality for many people.
In preparation for growing choice-of-fund, whether mandated or not, trustees, especially through the Australian Institute of Superannuation Trustees (AIST) have been calling for greater disclosure of fees and charges. We want members to be able to get, without too much effort, an idea of what different funds charge members, and how much of their retirement benefit will disappear in fund charges before they retire.
We have been concerned about the dangers of excessive exit fees, which make a mockery of choice. We are also dismayed by the current confusion around the ways that a whole raft of fees are expressed by some master trustees and retail products.
As part of its deregulation push, the Government wants to regulate open-ended portability. We agree that it should be simple and low cost for a person to amalgamate a number of small balances, or shift from one fund to another when changing jobs. Again, the possible benefits of improved portability would be undermined if exit fees are prohibitive, or the fees of the new fund deceptive, or the member loses insurance cover through the move.
Another concern is that consumers need accessible information, they need protection against unscrupulous marketers, and they need encouragement in their savings effort.
Trustees are going to have to keep on their campaign for more government attention to the long-term problems of discouraging adequate retirement savings through excessive and unfair taxes.
— Susan Ryan is president of AIST.
AUTHOR
Zilla Efrat
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