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Tuesday, 11 August 2009
Page: 4629

Senator Cormann asked the Minister representing the Minister for Employment and Workplace Relations, upon notice, on 22 May 2009:

(1)   With reference to the Minister’s repeatedly stated concern about superannuation fees and charges, does the Minister, the Minister’s office or the department actively monitor fee increases in the industry.

(2)   Is the Minister aware that one of the major funds nominated as a default fund in many awards announced a 50 per cent increase in fees with effect from 1 January 2009.

(3)   Is the Minister concerned about this fee increase.

(4)   Is the Minister concerned that Australian workers will be automatically enrolled in this fund without their express consent. 5)     Will the Minister communicate to the Australian Industrial Relations Commission and/or Fair Work Australia: (a) his concern about this cost increase; and (b) that at least four or five funds should be nominated in each modern award to ensure employers have a choice and can avoid funds that inappropriately raise fees; if not, why not.

(6)   Has the Minister sought and received any advice from the department about default fund fee increases; if not, why not.

(7)   Did the Minister receive advice about default fund fee increases; if so, can a copy of that advice be provided; if not, why not.

Senator Arbib (Minister for Employment Participation and Minister Assisting the Prime Minister for Government Service Delivery) —The answer to the honourable senator’s question is as follows:

(1)   Portfolio responsibility for superannuation matters rests with The Hon Chris Bowen MP, Minister for Superannuation and Corporate Law. Minister Bowen has asked APRA to enhance its superannuation statistical collections and publications, including data on superannuation fees and charges at the fund level. On 25 May 2009, APRA released a discussion paper which invited comments on a range of options for developing improved collections and reports. I note that the Australian Securities and Investments Commission (ASIC) automatically collects some superannuation fee data in product disclosure statements when product issuers update or roll these over and advise ASIC. The Minister has asked the Australian Prudential Regulation Authority (APRA) to examine and report on the extent to which superannuation funds are charging increased fees on employee’s superannuation when they are retrenched or change employers.

(2)   I am aware that AustralianSuper announced an increase in its weekly fees from $1 to $1.50 which took effect on 1 January 2009. I understand that this increase represented the first increase in several years. I note that a Super Ratings Media release dated 2 April 2009 reports that over the last five years, AustralianSuper’s balanced option returned, on average, 6.1 per cent per annum compared to an industry average of 3.7 per cent. I also note that if an employee is concerned about the fee increase they can choose another fund to which their superannuation contributions are paid.

(3)   The Government is conscious of the impact that fees have on the retirement savings of working Australians. This is why it has announced the Review into the governance, efficiency and structure and operation of Australia’s superannuation system. The Review will examine ways to boost the retirement savings of all Australians by increasing efficiencies, reducing costs and fees and in turn lifting long-term rates of return. I note that if an employee is concerned about the fee increase they can choose another fund into which their superannuation contributions are paid.

(4)   The Australian Industrial Relations Commission (the Commission), following extensive stakeholder consultation, arrived at the decision to nominate certain default funds. Default funds are a key aspect of the superannuation system which ensures employees can receive their compulsory superannuation guarantee contributions where they do not exercise their right to choose a fund. Employees are still able to nominate any superannuation fund they choose under Choice of Fund legislation and are also free to include a different superannuation fund in a collective agreement.

(5)   The variation of arrangements within superannuation funds over time is to be expected and it would not be appropriate to write to the Commission every time such a variation occurs. A regular review process exists in the Fair Work Act 2009 to ensure that modern awards remain appropriate and best reflect the objects underpinning their creation.

(6)   I have not sought, nor received, advice for my department about default fund fee increases. This is a matter appropriately dealt with by the Minister for Superannuation and Corporate Law.

(7)   I have not received advice on default fund fee increases.