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Tuesday, 25 March 1997
Page: 2421

Senator SHERRY (Deputy Leader of the Opposition in the Senate)(8.36 p.m.) —by leave—I move:

(9)   Clause 51, page 37 (line 6), omit ", or the employer of that person,".

(10)   Clause 51, page 37 (lines 14 to 25), omit paragraphs (c) and (d), substitute:

(c)   the application is made in respect of not more than one person; and

(d)   when the person received the form, the person also received:

      (i)   such additional information (if any) and such additional documents (if any) as are required by a determination made under subsection (3); and

      (ii)   and information statement that complies with subsection (2A); and

(e)   the person making the application certifies that he or she has received the information referred to in paragraph (d) and understands the characteristics of, and risks associated with, RSAs.

(11)   Clause 51, page 37 (after line 25), after subclause (2), insert:

      (2A)   A person who applies for a RSA must be provided with a statement, approved by the Commissioner, which sets out in plain English the following information:

               (a)   a clear and concise statement of the differences between an RSA and a superannuation fund;

               (b)   a clear and concise statement of the choices available to an RSA holder of maintaining an RSA, or transferring the balance to an industry-based, employer sponsored or public offer superannuation fund; and

               (c)   a clear and concise statement of recent average investment performance of RSAs compared with industry-based, employer sponsored or public offer superannuation funds; and

               (d)   an explanation about the low-risk nature of RSAs, their low-growth potential and their limitations as retirement savings vehicles; and

               (e)   a clear and concise statement of any fees and charges in relation to the RSA.

Amendment 9 removes the ability of the employer to lodge an application form for the provision of an RSA on behalf of an employee. This is absolutely fundamental to the Australian Labor Party. We have touched on this issue previously. Senator Kemp says that employers lodge an application form for employees in current industry and traditional in-house company funds, but RSAs are a different product, a commercial product, offered by banks and other financial institutions. It is a different situation.

We do not believe that employers should be signing up employees. There will unfortunately be elements of coercion on some occasions. We believe that it is totally unacceptable for an employer to open an account on behalf of an employee. It is the employee's money. It is to be their retirement income. Why should the employer have that sort of relatively unrestricted ability to sign up employees?

These RSAs are a low growth, low return product. The Consumers Association produced research that showed that an individual remaining in an RSA during the period of their working life can be up to $200,000 worse off, depending on earnings. This situation is not acceptable to the Labor opposition.

In respect of amendment No. 11, we are inserting a new section after clause 51 to set out in the disclosure statement—that is, to be the provider to the individual when seeking an application to open an RSA. It requires a clear and concise statement. This means that the statement must be in plain English, must be readily understood and must articulate the differences between an RSA and superannuation. That is, an RSA is a low growth, low return product which is not an adequate vehicle for long-term retirement savings. It must be made known to the applicant that there are alternative choices available when the opening of an RSA occurs. There are public office superannuation, industry and employer sponsored funds.

It must be made clear to the individual that the individual is able to transfer the balance of the RSA to another fund. It must set out the average performance of RSAs as compared to industry, employer and other types of superannuation funds. We have traversed the issue of fees and charges. We believe that these amendments 9 and 11 are absolutely necessary to ensure the security of workers' compulsory retirement savings.