Labor Senators' Minority Report
Labor makes the following
observations about the legislation.
Choice of Superannuation Funds
This is a further set of
amendments to the main choice of Funds Bill with only a little over a week to
the start up date of July 1, 2005.
It is unsatisfactory that
important amendments are being finalised so late.
The issues dealt with are not
new and have been raised by interested parties in previous years.
Taken together with the yet
to be finalised regulations for the provision of simplified product disclosure
statements (PDS) for consumer disclosure – a critical safeguard – to allow the
maximum informed choice by consumers the Government should have been far better
prepared for what is, by anyone's description a radical change to the nature of
superannuation.
Employers and employees
deserve greater certainty.
Labor has long argued that
the Liberal Government's Choice of Fund regime is too complicated and unsafe.
Employers are faced with a
substantial new red tape burden. New form filling and record keeping, ongoing,
payments to multiple funds – all new costs. Employers have only just become
aware of this with the notification by the tax office. Significant penalties
apply – 2 years in gaol and /or $22,000 fine for giving advice in breach of
FSR.
For employees, it is an
unsafe regime with insufficient protection and regulation particularly on
aspects of fees, charges and commissions. Exit fees and trail commissions which
are a financial barrier and fundamental conflict of interest are not regulated.
The disclosure regulation PDS referred to earlier, a fundamental aspect of the
Liberal Government's inadequate protection regime is not finalised and will not
be prior to the July 1 start up date.
RECOMMENDATION
Accordingly Labor recommends
that:
- Small businesses – defined as an employer with fewer
than 20 employees - would be exempt from
Choice of Superannuation; and
- An employer who inadvertently provides advice for no
financial reward and at the request of an employee is exempt from any
penalties.
Superannuation Bill 2005 and Consequential
Amendments.
Labor has two concerns about
this legislation.
- Provision for
AWAs which can be employer imposed to override Choice of Fund and/or impose a
new default fund other than the PSSAP.
- Lack of
transparency in that the updated actuarial figures for unfunded public sector
super has not been publicly released, despite two requests to do so at both the
February and May estimates.
This update has been carried
out given the PSS is to be closed from July 1, 2005, and is critical
information needed for a full public debate particularly in the context of the
related Future Fund.
RECOMMENDATION
Accordingly Labor recommends that:
- The Government provide the updated actuarial
projections and be condemned for failing to publicly release it.
- Any AWA applying to the Public Sector may not contain
a super provision in respect to the default fund for Superannuation Choice. In
other words the PSSAP is the default fund.
Senator Ursula Stephens
Deputy Chair
Senator Ruth Webber