Australia’s employer-employee superannuation, better known as the Superannuation Guarantee Levy system, could be simplified with little effort.
All it needs is the introduction of a National Superannuation Number (NSN) system and a Federal central collection agency through which contributions can be channelled.
The idea is to allow existing superannuation funds to be able to collect on behalf of other funds, and for these contributions to be forwarded to the central collection agency by quoting the NSN number.
Employees will be guaranteed freedom of choice and the employer needs to make only one payment on behalf of employees.
The distribution of the contributions will be handled by the employer fund in conjunction with the central collection agency.
If required, the employer can also make the payment directly to the central collection agency.
The key to this all will be the employees’ National Superannuation Numbers.
Under this system superannuation funds can concentrate on competitive marketing and employees will be able to get financial planning advice.
The system will stop the increase in lost member funds, where fund managers do not have the correct address for past employees.
The present $6.8 billion in lost member funds can gradually be allocated to the rightful owners on proof of identity.
Fund managers will need a collective approach on how best to implement the scheme.
The cost of establishing a central collection authority and the NSN system by the Federal Government could be recouped from the surcharge on superannuation of higher income earners.