AUSTRALIA - The Association of Superannuation Funds of Australia (ASFA) has called on the government to make employers adopt an ‘opt-out' scheme to increase employees' voluntary contributions.
This type of scheme would automatically raise the employee contribution percentage in line with any pay rise. Employees would have to sign an opt-out form to leave the scheme.
It is hoped this would encourage an increased level of savings.
Last year Plum Financial Services trailed the Escalator Programme which followed a similar structure.
Plum MD Mike Fitzsimons said: “By automatically increasing an employee’s contribution in line with remuneration reviews we can help overcome the member’s inertia to savings without them seeing a reduction in take home pay.”
Fitzsimons continued that the trails had seen a low opt-out rate and all Plum clients would now be offered the plan.
Both the Plum program and ASFA’s submission were based on behavioural finance theory.
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