The Government’s new choice of superannuation fund legislation has failed to take account of situations such as the open defined benefit arrangements offered by universities sector industry fund, UniSuper.
The big industry fund has warned the Senate Economics Legislation Committee that the Government’s legislation risks having significant detrimental impacts on its open defined benefit arrangements.
“Almost all permanent employees in the higher education sector are enrolled in UniSuper’s open defined benefit division upon joining the sector and receive contributions at rates which significantly exceed the Superannuation Guarantee rate,” it said.
“UniSuper is one of the only – if not the only – open, private sector defined benefit fund. We believe that the bill would impact UniSuper and our members inf a way in which very few other funds would be affected. We are keen to ensure the avoidance of detrimental impacts for UniSuper members and the security of their retirement savings,” the fund’s submission said.
It said that in pooled arrangements such as defined benefit schemes, the decisions of some members could impact many members and that changes to the number and characteristics of new members to a defined benefit scheme, particularly changes to the age and career earnings profile of new members, could have flow-on consequences.
“UniSuper has neither a government or employer guarantee to cover funding shortfalls, nor recourse to additional employer contributions,” the submission said. “As a result, the risk of adverse outcomes from changes to experience would ultimately be borne by fund members.”