Important lesson for all consumers as REST Super gets sued by ASIC
Here's why REST Super is in trouble with the regulator, and what we can all learn about our own superannuation as a result.
Popular industry super fund REST is getting sued by the Australian Securities and Investments Commission (ASIC) for misleading its members. The regulator alleges that REST Super discouraged members from transferring their super out of REST and into another super fund and even delayed or prevented members from taking their super out of the fund.
ASIC is also alleging that REST deceived members into believing it was more difficult to leave the fund than it is and that they needed special permissions from their employer to take their super out of the fund. ASIC alleges REST made some members believe they needed to have written proof that they were changing jobs and leaving their employer in order to switch their super out of REST.
This goes against superannuation laws, which grant consumers the right to choose their own super fund and to freely switch or consolidate funds when they wish to do so.
In its statement, ASIC said some members may have been left worse off financially by being discouraged to leave the fund.
"ASIC's case is that these members were denied their lawful rights to superannuation portability and choice of superannuation fund, causing members to suffer financial loss. ASIC further alleges that this conduct resulted in REST retaining a higher level of funds under management than would otherwise have occurred," the statement read.
What can consumers learn from the REST Super case?
The big lesson for all consumers, not just members of REST, is that your super belongs to you and you're in control of where it's invested. This is guaranteed under the choice of fund and portability of fund super laws.
"Choice of fund and portability of funds are important rights for members. They allow members to consolidate funds and, among other benefits, to avoid superannuation balance erosion through unnecessary fees and costs. ASIC is concerned that where members are prevented from consolidating, this may lead to increased fees and costs of holding multiple superannuation funds," read the ASIC statement.
Here are the main issues from the REST super case that consumers need to be aware of:
- You don't always need to invest in your employer's chosen fund. Employers are required to select a preferred fund for their employees in case their employees don't have their own fund or don't want to choose one themselves. However, most employees aren't obligated to go with their employers preferred super fund, and in many cases, you can choose your own (unless the fund is determined as part of your specific Award or Enterprise Agreement).
- You can switch funds at any time. If you do opt for your employer's preferred super fund but later decide you want to switch to a different fund, you're able to do this. You can switch super funds at any time, and you don't need your employer's permission to do so.
- You can consolidate funds at any time. If you have multiple super funds open in your name, you can choose to consolidate them into one fund at any time. Again, you don't need your employer's permission to do this. If you do have more than one fund in your name, each year you delay consolidating them into one is costing you more money in duplicate fees and charges.
If you're not happy with your current super fund, you can easily change super funds online at any time. If you've got more than one fund in your name, here's how to consolidate super funds to ensure you're not paying multiple sets of fees unnecessarily. And if you're after a bit of help comparing your options, here are some of our best super fund picks.