CANBERRA - Many Australians could be disadvantaged under new laws allowing for choice in superannuation, former Reserve Bank governor Bernie Fraser has warned.
He said there was a risk of poor advice from competing fund entrants leading to poor alternatives for employees.
Mr Fraser, a trustee and independent director of
several super funds, launched a television advertising campaign for Industry Super Funds ahead of the introduction of the choice of funds laws on July 1.
Industry Super Funds started more than 20 years ago after an ACTU-led campaign and represents more than 3.8 million workers.
Most are operated through unions and boast superior returns in comparison to retail master trusts.
"It's intrinsically good that people should have choice in so many things, including superannuation," Mr Fraser said.
"Choice of fund will be good if it enables people who might be stuck in a poorly performing fund, for example, to shift to a better performing fund.
"It will be good if it does deliver benefits in the form of lower costs and higher returns to employees, which after all is what the objective of choice is supposed to be.
"But it will also be bad, and obviously bad, if it doesn't deliver benefits to employees but instead results in lots of expensive churning."
He said the major beneficiaries of this churning were commission agents, fund managers and others who were supported by the ordinary super contributions of the average Australian.
"We don't want to see ordinary Australians disadvantaged, or dudded, by choice."
Mr Fraser said total assets of the super industry were about A$750 billion ($807.75 billion) and annual fees and charges from that could amount to A$5-10 billion a year.
"They're big bikkies," he said.
"It's a big honeypot and, whenever there's such large sums around, there's always a risk that the information and advice underpinning the choice of fund will not always be proferred with the best interests of employees in mind.
"That's a real risk, I think."
Finance Minister Nick Minchin meantime denied the choice laws were motivated by an attack on union dominated super funds.
"That's not what it's about. We're not having a go at them, per se," Senator Minchin told ABC television.
"What we're about is giving ordinary Australians their right to choose where their super funds go -- a right they should have had for a very long time."
He said the coalition had long believed individual Australians should have choice as to where their superannuation money goes.
"But the left-controlled Senate has denied Australians that choice," he said.
"What you're seeing now is healthy competition developing between the funds to attract Australians to their funds."
- AAP
CANBERRA - Many Australians could be disadvantaged under new laws allowing for choice in superannuation, former Reserve Bank governor Bernie Fraser has warned.
He said there was a risk of poor advice from competing fund entrants leading to poor alternatives for employees.
Mr Fraser, a trustee and independent director of
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