Fed: No one choosing super choice

AAP General News (Australia)
02-14-2006
Fed: No one choosing super choice

By Shane Wright, Economics Correspondent

CANBERRA, Feb 14 AAP - When offered choice, Australians have decided against moving
their retirement money.

A new analysis by the superannuation industry of the impact of super choice laws has
found that people have shown little interest in either moving their nest eggs to different
funds or setting up their own.

Super choice was introduced at the start of the 2005-06 financial year, with pundits
and surveys suggesting almost one in five people would change their superannuation supplier.

But the Association of Superannuation Funds of Australia (ASFA) survey found that since
workers were given the right to choose their super fund, just four per cent had actively
sought out a new fund.

Around seven per cent of people had changed funds, but two per cent of that was due
to changing jobs, while another one per cent had changed because their old fund had closed.

The introduction of super choice also sparked suggestions more people would create,
and manage, their own super funds.

But the ASFA survey found just 0.5 per cent of people surveyed had actually chosen
to follow through with a self-managed fund.

In fact, the number of self-managed funds being created per month has fallen by almost
a third since the introduction of super choice.

While some analysts had believed super choice would lead to people leaving industry
funds, the survey found many employers comfortable with industry superannuation.

"There is evidence that industry funds have fared better than some commentators expected
from choice of fund, and have continued to close the gap of market share between them
and retail funds," ASFA found.

"Industry funds are now able to attract and retain members without needing to rely
on provisions in industrial awards.

"As well, the account balances of those in industry (and other super funds) continue to grow."

ASFA chief executive Philippa Smith said it appeared the great bulk of employers were
not exercising their right to choose a new super fund.

"The ASFA study suggests that the rate of changing funds will continue at 11 per cent
or 12 per cent of employees a year, with around half of that due to active choice by employees
and the rest due to job change or fund closure," she said.

"Choice of fund will lead to the positive step of account consolidations, but the problem
of some members losing contact with one or more of their super accounts will remain."

The survey found many people who had considered changing super fund before the super
choice laws came into operation had simply decided to stay put.

"Fund members in many funds have now gone through a cycle of contemplating change,
and a larger proportion of members are now more rusted onto their fund than they were
before," it found.

The survey found up to 30 per cent of people could not be bothered to shift funds,
while another 10 per cent cannot change funds because of a workplace agreement or other
restriction.

Fifty per cent said they were staying put because of loyalty or commitment to the fund
they were in.

The survey found people in retail funds were more likely to move their cash.

AAP sw/sb/lma/bwl

KEYWORD: SUPER

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