Less than half of all employers expect to offer their employees a choice of superannuation funds in the next one or two years, a new survey has found.
The survey, conducted byMercer Human Resources Consulting, found 51 per cent of employers expect to continue offering their employees no choice over where their superannuation contributions are made over the next one or two years.
According to the survey, 71 per cent of employers currently offer their workforce no form of superannuation fund choice, while 18 per cent offer a limited choice and the remaining 11 per cent a full choice of fund.
Mercer Principal David Anderson says that fact that only 20 per cent more employers expect to offer choice over the next one or two years is a clear signal of their expectations of the future of the choice of fund legislation.
“The choice of fund legislation, initially proposed by the Federal Government in 1998, has not yet gained sufficient support to be passed by both houses of Parliament. The main stumbling blocks seem to have been the likelihood of large cost increases for employers as well as insufficient protection for consumers from the threat of unscrupulous dealers,” Anderson says.
“Other than employers who operate in Western Australia, where choice of fund laws have been in place since 1998, and some small businesses who don’t have contemporary arrangements in place, most employers currently do not offer employees a choice of super fund. Our research shows those who do offer fund choice tend only to cater for a small subset of their workforce, usually based on location, industrial award terms or seniority ranks,” he adds.
However the survey also found employers expect to migrate more of their employees from traditional defined benefit funds towards defined contribution funds over the next two years, a move which Mercer says will help facilitate a switch to a choice of fund environment.
According to the survey, 59 per cent of respondents expect the number of employees to be covered under defined contribution funds to increase over the next two years.
