Bills

Southern State Superannuation (Choice of Fund) Amendment Bill

Introduction and First Reading

The Hon. C. BONAROS (17:09): Obtained leave and introduced a bill for an act to amend the Southern State Superannuation Act 2009. Read first time.

Second Reading

The Hon. C. BONAROS (17:10): I move:

That this bill be now read a second time.

An efficient and healthy superannuation system is one of the critical principles in helping Australia meet the economic and fiscal challenges of an ageing population. The country's superannuation pool has accumulated over $2 trillion in assets. Given its size and growth, the system is of central importance to funding the economy and delivering retirement incomes. A key component of this should be choice and flexibility to the consumer. Regrettably, and in what might be called an unhealthy monopoly, more than 211,000 South Australian public servants are given no choice but to deposit their retirement savings in the state government-owned Super SA superannuation fund.

Anyone who is a public servant in South Australia right now, whether they be a teacher, nurse, emergency service worker or even a member of parliament, must be a member of Super SA. There is no exception to this rule. This means that over 200,000 South Australians are denied the opportunity of selecting their own superannuation scheme of choice by dint of their employment with the South Australian Public Service.

Conversely, public servants working for a federal government department are not subjected to the same restrictions. Indeed, South Australia is the only state that forces public sector employees to join a specified super scheme. That is not to say that the funds offered by Super SA are not performing; they are. Figures released by SuperRatings in July 2018 show that all of the top 20 performers for year are not-for-profit funds, either industry funds, public sector funds or corporate funds. Super SA funds do offer excellent returns to members, including better compounding returns, because contributions are not taxed until they are paid out as entitlements to members.

Members also have the ability to salary sacrifice moneys above the commonwealth's contribution cap. The performance of Super SA funds are not the issue this bill addresses; it is the lack of choice and flexibility provided to SA public servants in choosing their preferred super fund. Sadly, SA is lagging behind other states in the choice of offering to public servants, and it is time we caught up.

For reasons unbeknown to me, the state is barring the entire SA Public Service, a significant number of South Australians, from making their own informed choice about what to do with their retirement savings. Last year, former SA treasurer Tom Koutsantonis said public sector workers had not been asking for the right to leave Super SA; that is simply not the case.

A constituent in the federal set of Mayo earlier this year detailed his situation to my office. That constituent, a teacher employed through DECD, is of course with Super SA. He is 66 years of age and his income protection policy through Super SA ceased when he turned 65. He was wanting to refinance his financial affairs and was told by his financial institution that he cannot refinance unless he has an income protection policy. The constituent was, up until this year, unable to change super providers to one that provides income protection cover until 69 years of age, such as AustralianSuper. While he looked into securing income protection insurance cover privately, he has told us that it comes at a significant cost for limited cover.

The Australian Human Rights Commission's report, 'Working past our 60s: reforming laws and policies' (2012), talks about encouraging insurance companies to extend their coverage of workers based on health and wellbeing measures and not on age limits. This would protect workers over the age of 65.

I understand that only in the last month Super SA has made changes that address the issue I have just outlined. Although that has now been rectified, it does still highlight the need for further review of the legislation, especially in relation to the choice of super funds more generally.

On a personal note, I have staff who came into their roles in state parliament earlier this year with longstanding existing super funds arrangements. They were faced with a situation of having Super SA accounts open for them for superannuation entitlements due to them in their new positions and also having to decide whether to maintain their existing, longstanding super fund accounts and therefore pay two sets of fees and charges or rolling over those maturing funds into Super SA and closing their pre-existing super fund accounts.

They and many other South Australian public servants should not be faced with this dilemma but instead should have the ability to have their super entitlements paid into the fund of their choice. It is a choice available to state public servants in other states and to those who work for the commonwealth government but, oddly, denied to South Australian public servants. It is time to repeal rules that require SA public sector workers to stay in super funds run by Super SA.

The bill does that for those public servants in the Southern State Superannuation, or Triple S scheme. The bill does not amend the superannuation schemes established under the Superannuation Act 1988. This is because the superannuation schemes created under that act, including a pension scheme, have been closed to new members for many years, although both schemes still have existing members and consequently are not affected by this bill.

The bill has been drafted in such a way because payments under the act are made from the Consolidated Account. As we know, the bill cannot make provision for payment of entitlements to members who opt out of the Triple S scheme, as it would be a money bill and there would be appropriation from the Consolidated Account. Consequently, the bill as drafted refers to matters of the regulations. Firstly, clause 19A(3)(c) provides that an amount standing to the credit of a person's account is to be dealt with in accordance with the procedures set out in the regulations, and section 21(3c) authorises the making of regulations that will allow employers to fulfil their responsibilities under the commonwealth act. This obviously allows us to overcome those issues of a money bill.

In 2017, former federal financial services minister Kelly O'Dwyer said that South Australians are being dudded because they have been forced to keep their money in a specified fund even when they might have wanted to change funds or put their money into a self-managed super fund. SA Super is responsible for $24.4 billion in total assets under management at the end of the past financial year. It has been a quarter of a century since super became compulsory. These sensible reforms are long overdue and deserve to be passed by the parliament. Making it easier for members to get engaged and compare products is an essential prerequisite for driving healthier and safer competition in the super system and ultimately making competition work for members rather than against them.

The Productivity Commission draft report, entitled Superannuation: Assessing Efficiency and Competitiveness, published in April this year, at recommendation 5 stated:

Proposed legislative changes to prohibit restrictive clauses in workplace agreements on members' choice of fund are much needed.

With this bill, SA-Best has delivered the legislative changes required to effect change and provide choice and autonomy to South Australian public servants so that they are on par with every other state and commonwealth public servant. We are keen to work with the government, the opposition and the crossbenches to ensure the bill becomes a reality. I commend the bill to members.

Debate adjourned on motion of Hon. T.J. Stephens.