Need To Monitor Choice Burden on Business
24 June, 2005
Tasmania's largest industry superannuation fund has called on the Federal Government to carefully monitor the impact of new superannuation laws on Australia's business sector.
General Manager of Tasplan super, Neil Cassidy, believes that some small to medium - sized businesses in particular may find the new requirements confusing and could inadvertently fall foul of superannuation laws.
According to Cassidy, some of the 'fine print' associated with the Federal Government's choice of fund legislation could pose problems for employers.
He warned that whilst it will be 'business as usual' for many firms when choice commences from July, there are some businesses which will face a not inconsiderable administrative and compliance burden.
In the worst case, a medium - sized firm could suddenly find itself being required to make super contributions to scores of different super funds - each with its own systems, forms and procedures.
"Whilst so-called 'Clearing Houses' have been put forward as a possible solution for some employers, such a service could come at an additional cost for business." Cassidy said " It is already estimated that the compliance cost for business may top $25 million in the first year".
But according to Cassidy, the burden of choice for employers goes well beyond the administrative cost of processing super payments.
"Employers need to stay on the right side of an expanding range of new superannuation laws many of which include penalties for : -
- illegally giving advice to employees
- seeking reimbursement for the cost of choice
- not offering choice to employees
- not making super payments within prescribed periods
- not keeping required records
and the list goes on! Cassidy said there were also other ways in which business could inadvertently fall foul of the authorities.
'Third - lining', for example, is a practice the Australian Securities and Investment Commission ( ASIC ) has said it will be monitoring closely.
"This is when a financial institution offers a business discounted financial services if it agrees to nominate that institution's super product as its default fund for all employees."
Cassidy said he was concerned that some businesses may be bearing a disproportionate burden and had directed his staff to review systems and services used by Tasplan's 10,000 participating employers.
"Industry funds like Tasplan should be striving to provide the simplest systems and the widest possible range of contribution options for employers so that they are not overwhelmed by superannuation."
Cassidy said super funds should be reviewing their systems and procedures to ensure that they are ' business - friendly' to help reduce the impact of choice legislation.
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