Ask Paul: My wife is stuck in a dud super fund because she teaches at a Catholic school

Dear Paul,

Recently my wife received a letter from her superannuation fund explaining that, in line with the new government super regulations, the fund has been listed as a poor performer and is notifying its members as such.

Ordinarily it wouldn't be a big issue - we could simply look into moving to a new, better-performing fund.

However, my understanding is that due to my wife's employment as a teacher at a Catholic school, she's obligated to stay with her fund, irrespective of its performance.

While I'm sure the fund will be doing whatever is necessary to remove this unwanted title, I fear it's too little, too late, and would prefer to move her nest egg.

I'm curious as to whether, in light of the regulations of funds, there's any recourse for my wife to change funds? Do we have a leg to stand on? Or are we stuck with a lemon? - Chris

Chris, yours is the first question I am answering for this issue and I am angry already.

Mind you, I usually get cranky about our rights to make choices with our money at some stage as I answer readers' questions, but the habit of a number of faith-based organisations and other companies to act as dictators, presumably thinking it is the 18th century, really gets me aggravated.

Even if it was a top-performing fund, offering no fees to employees, low-cost insurance and other benefits, it should still be your choice.

There are moves afoot to legislate this, but it would only cover workplace determinations or enterprise agreements after July 1, 2020.

However, we should breathe deeply, and while considering the poor performance you should also check out any compensating employee benefits I mentioned. If, in fact, the whole super package is a dud, it also really aggravates me to have to suggest this, but she could start a second, low-cost, high-performing fund.

You keep the current dud fund open to accept employer contributions, then move the balance to her new fund a couple of times a year.

Of course, this is a pain and even in a low-cost fund there are still some fees, so she may end up paying two lots of fees.

Truly, even putting aside new rules to get rid of this archaic practice, you would think the board members or councils of organisations seeking to direct our money to a super fund that will directly or indirectly benefit the organisation and not the individual would be ashamed of themselves.

If a super fund offered by an employer was a terrific, solidly performing super fund, with good benefits, we would want to stay!

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