South Australian public servants would get to choose their own superannuation funds like most Australians under a bill drafted by an upper house cross-bencher, and the government appears open-minded about the idea.
Treasurer Rob Lucas is reportedly consulting the main public sector union and Super SA about their views on the proposal to end the lock-in, which came from Connie Bonaros, a Member of the Legislative Council from the SA Best party.
Lucas said the Liberal Party generally favoured consumer choice, according to a newspaper report, but also suggested the proposed change could lead to government employees paying more tax. Contributions to the SA Super schemes, some of which have been closed off to new entrants over the years, are not taxed until they start paying out.
Bonaros thinks it is “ludicrous” that SA is the only Australian government that still only allows its employees to have contributions paid into one government-owned fund.
“Compulsory superannuation has been around for about 25 years, and in that time many South Australians have been forced to keep their money in a specified state-owned fund — even where they might have wanted to change funds or put their money into a self-managed super fund,” she said in a statement.
SA public sector employees were excluded due to state law when federal legislation gave most Australians the right to choose their fund in 2005.
Late last year, the federal Minister for Financial Services Kelly O’Dwyer came out strongly in support of allowing SA public sector workers to choose where their retirement savings go, saying they were being “dudded” by the restrictions.
At that time, before the recent change of government, former treasurer Tom Koutsantonis said he wasn’t aware of a strong desire for superannuation choice on the part of state employees themselves.
SA Super compares relatively favourably with other options its members could choose if the bill is passed, in terms of fees and returns, but there could be advantages to being able to consolidate more than one fund, for some people.