Wednesday 15th June 2005
Forget choice, I want security, says Gemma
Gemma Smith, an EN at Canterbury Hospital, is sick of hearing about choice.
‘You hear it all the time – from banks, advertising, politicians, supermarkets. I don’t need more choice. I need some genuine help with making a decision,’ she says.
Gemma says this is particularly true when weighing up the pros and cons of different super schemes.
‘Really, what do I know about the details of finance and super. I just want a fund that will deliver me enough money for a comfortable and secure retirement.’
More choice for employers
From 1 July 2005, more than 50% of Australian workers will be given a choice about where to direct their retirement savings.
Gary Weaven, a key architect of union involvement in superannuation and now a respected industry consultant, says union members need to very wary about the new changes and the bombardment of advertising they are about to receive.
‘The government’s intention is to wipe out award provisions for super. This means employers will determine what sort of super an employee gets. It gives employers more choice.
‘A lot of money is being spent on confusing the public about the marketplace and products. Commercial funds are outspending industry funds by five to one on advertising,’ he says.
‘Australia’s super industry is worth about $700 billion a year. The industry super funds are worth $11 billion but have more than seven million members. This is a field of prey for financial institutions.’
Gary Weaven says unions’ primary objective has always been to ensure that Australian workers have access to low-cost superannuation that maximises their retirement income.
‘Unions are not opposed to choice but they harbour serious reservations about the impact of the new laws.’
In particular, there is a fear that financial planners will be the organising arm of corporate funds.
Beware when it comes to your super
Gary says the key concerns are:
Unions and the Labor Government introduced universal superannuation in 1995 to address the ageing population. At that time, only 39% of employees had superannuation. Now 97% of the workforce has super.
According to research conducted by a major super research group, SuperRatings, over five years to 31 December 2004 the average industry super fund returned $8.34 in earnings for every dollar taken out in fees. The average retail master trust returned $2.44.
Key benefits of industry super funds