Employees may have some benefits cut.
Employers may be forced to reduce the benefits they provide for their employees as a result of Stronger Super legislation, as certain super funds change their structure to comply with the new rules.
Gareth Hall, Treasurer of the Corporate Super Specialist Alliance (CSSA) said that the CSSA was aware that certain superannuation funds were in the process of removing the ability for employers to pay administration fees and insurance premiums on behalf of their staff.
“It seems that some funds are using the MySuper compliance rules as an excuse to withdraw their employer sponsored fund offering; simplifying their service to now only deal directly with the individual fund members,” Mr Hall said. “This can have a detrimental effect on employee’s retirement savings.”
The result being that workers, who have previously had their fees paid by their employer, are now paying all these fees themselves, out of their own superannuation monies.
“The changes seem to result from the funds’ interpretation of MySuper guidelines, which insist that MySuper products provide the ‘same offering for all members’,” Mr Hall said.
This is a direct consequence of the Stronger Super regulations that were supposed to provide simplification and a reduction in fees.
“This loss of additional benefits may, in some cases, cost members more than the recent increase in Superannuation Guarantee (SG) payments (from 9% to 9.25%). The lower contribution limits have also slashed the ability of employers to provide more generous contributions for staff.”
Mr Hall said, “These restrictions may force employers who have previously been providing superannuation benefits in excess of the legislated minimums to either stop making these additional payments or to pay them as taxable salary.”
Employers and their employees should be aware of the finer points of the Federal Labor Government’s legislation, including some outcomes which are not necessarily in everyone’s best interest.
