Delay in compulsory super puts workers funds at risk of poor investments
3 September 2014
Chee Chee Leung
The freeze on superannuation guarantee contributions could put Australian workers’ money at greater risk of dodgy investments, according to leading superannuation law firm Maurice Blackburn.
John Berrill, a principal at Maurice Blackburn and head of the firm’s superannuation practice, says having more money in the open market rather than in super funds could expose people to poor investment practices.
“Compulsory super funds are subject to much stricter rules around investing members’ money than other investment products available in the open market,” he said.
“By putting money for workers into compulsory super, there’s a much smaller chance that it will be gouged by dodgy financial advisers, poorly run self-managed super funds, or excessive bank fees.”
Mr Berrill described the change in super as a breach of promise that would undermine the commitment to ensure Australian workers have a sufficient nest egg in retirement.
“We act for thousands of workers in trying to get their full super entitlements who will now be faced with greater uncertainty about whether they will have enough money to live off in retirement,” he said.
“There is no way the 9.5 per cent contribution, frozen until 2021, will be enough. It will simply increase the dependence of more people on age pensions at a time when baby boomers are transitioning to retirement.”