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

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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.

ask paul clitheroe my wife is stuck in a dud super fund because she is a teacher at a catholic school

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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Paul Clitheroe AM is founder and editorial adviser of Money magazine. He is one of Australia's leading financial voices, responsible for bringing financial insight to Australians through personal finance books, the Money TV show, and this publication, which he established in 1999. Paul is the chair of the Australian Government Financial Literacy Board and is chairman of InvestSMART Financial Services. He is the chair of Financial Literacy at Macquarie University where he is also a Professor with the School of Business and Economics. Click here to ask Paul your money question. Unfortunately Paul cannot respond to questions posted in the comments section. Please view our disclaimer here.
Comments
Kris Smith
December 8, 2021 11.37pm

I'm in exactly the same position.

I simply withdraw my payments every 6 months and transfer to my other super account.

No need to stress.

Win/win all round.

Mike Richards
December 10, 2021 2.00pm

No different to anyone who works in the public sector, where you are forced to have Triple S, CommSuper etc., why is this person so special ?! (Answer: they're not).

If those funds underperform, you can't move and even if you could, it is often because they are untaxed super funds (hence, golden handcuffs) and you'd have to be doing MUCH better in your other super fund.

Stella S
December 13, 2021 8.34am

How are the two comments on this story both from people saying, "Yeah it sucks but I had to deal with it so why shouldn't everyone else have to suffer too?"

Mike Richards
December 14, 2021 11.14pm

Stella, do you have something constructive to say ? I think Kris's comment made perfect sense, and my comment highlights that it is not just this person and their fund, it is other people as well and not an isolated case. Hence, maybe those who are able to give a platform to it (Money Magazine) should do a wider feature on it, so that enough people learn about it and get angry enough to do something ?

Super (as a system) sucks, because you are charged on the way in, in there and on the way out (just like any other investment, really). The only good thing is the tax relief and the forced savings, which most people need, otherwise they'd retire with nothing. And choosing a super fund is literally a lottery, because you hope you get a good one. QED.