AUSTRALIA - A mere 7% of those eligible to move fund under the government's new Choice of Fund legislation have taken up the opportunity, new research has found.
The survey by the Association of Superannuation Funds of Australia (ASFA) also found of those 7%, only 4% had actively chosen to switch.
Furthermore, quantitative research conducted by ANOP found that of the 4%, some 2% switched because they changed jobs, and a further 1% changed because of closure of their old employer’s fund.
Australians have had the opportunity to choose their super fund since the legislation took effect on 1 July.
Separately, Nick Sherry (pictured), shadow minister for superannuation, labelled the choice iniative a “super rip-off” after instances of mis-selling were revealed at a Senate Committee hearing with the Australian Securities and Investment Commission (ASIC).
The commitee heard how a couple with A$6110 in a fund, who were convinced to roll into a new fund, found themselves charged a total of $1157.52 (or 19%) in exit and entry fees, plus a $5719 a year new insurance fee.
In another instance, a man switched from an existing fund with low fees into a new fund with higher fees and a 4.5% entry fee, based on an advised need for $250,000 insurance when no such insurance was necessary.
It is appalling and outrageous that everyday Australians are being ripped off when advised on Super Choice, Sherry said.
Super is compulsory, complex and long term. I am deeply concerned that consumers are unaware when they are being ripped off.”
Philippa Smith, CEO of ASFA, commented: There was no big bang on 1 July as a result of choice of fund, nor has there been since.”
But she added: “General awareness of superannuation issues has increased significantly from a year ago, and consciousness of choice of fund has doubled to 90% since this time in 2004.”
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