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Data shows steady growth in super choice driven by job turnover
Choice of superannuation fund continues to grow at a very steady rate driven by job turnover and account consolidation, according to the latest data from the industry's leading service provider, InvestmentLink.
InvestmentLink's experience with nearly 1.2 million active superannuation accounts - one of the largest samples available and representing 12 per cent of working Australians - contradicts recently expressed views that the number of people exercising choice is relatively small.
Mr Peter Philip, Chief Executive of InvestmentLink, said nearly 7 per cent of members had exercised choice through the SuperChoice electronic clearing service in the first 18 months of choice.
He said a more accurate reflection of the levels of choice when small to medium employers were taken into account was 10 to 15 per cent of the eligible population.
"Australians are clearly using choice as an opportunity to consolidate accounts by not opting for a new account when they start a new job," Mr Philip said. "And much of the impact of choice is building around employees who have changed jobs since July 1, 2005."
ASFA estimates about six million Australians are eligible for choice. This means whatever is happening through InvestmentLink's SuperChoice service can be multipled by a factor of five to extrapolate the Australia-wide impact of choice.
The data is as follows:
| July 2005 | October 2005 | February 2006 | June 2006 | December 2006 | |
|---|---|---|---|---|---|
| Choice | 0 | 17,910 | 32,365 | 48,857 | 78,030 |
| Total Service | 824,555 | 921,491 | 983,820 | 1,055,947 | 1,173,071 |
| 0.00% | 1.94% | 3.29% | 4.62% | 6.65% |
| July 2005 | October 2005 | February 2006 | June 2006 | December 2006 | |
|---|---|---|---|---|---|
| Choice | 0 | 1,606 | 2,262 | 2,999 | 4,021 |
| Total Service | 24,591 | 26,541 | 28,779 | 31,143 | 34,830 |
| 0.00% | 6.05% | 7.86% | 9.62% | 11.54% |
| Total Service | Choice of fund | Choice Impact (%) | |
|---|---|---|---|
| Transactions |
5,242,716 | 95,307 | 1.82% |
| Transactions |
9,852,147 | 225,062 | 2.28% |
| Transactions |
11,450,855 | 410,513 | 3.58% |
Mr Philip said Australians using the SuperChoice service were opting for choice funds at a steady rate of about 5000 a month.
He said about one in four employees joining a new employer were making a choice not to opt for their employer's default fund, which had profound implications for the industry.
The figures also show larger employers, who wear the greatest initial administrative pain with choice, have adopted choice-enabling technology first. Medium-sized employers now experiencing the administrative pain are following to ease the workload. However, most smaller employers are handling choice administration by labour-intensive cheque and schedules.
Mr Philip said primary structural impediments to portability were inherent in the system rather than providers causing obstructions, but structural flaws were now being tackled by the Government with bipartisan and regulatory support.
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