Thursday, 18 June 2020
Treasury Laws Amendment (Your Superannuation, Your Choice) Bill 2019; In Committee
I want to be clear—the minister might have misinterpreted—that I moved together, by leave, amendments (1) to (3) on sheet 8981 but I didn't move Senator Waters' amendment. You did refer to that in the $450 threshold in your response, so I just wanted to clarify that that was 'your bad'—not that it was very bad! I just wanted to make it clear that I am talking to my amendments. Senator Waters will get to talk to her amendments in a minute and we'll deal with that then.
As was just alluded to by Senator McAllister—and I went through this a bit in my speech—is that what is unusual about defined benefit schemes is that they guarantee the rate of return for employees. As I mentioned, there are not many of these around anymore. The membership of the funds is, obviously, tightly controlled—the actuarial studies that were referred to by Labor relate to that point—to allow for better planning of likely payment costs and to avoid adverse selection. Of course, having people join the fund just before retirement, to get access to better returns, is not in the interests of the scheme—you sign up to it and that is planned over a period of time. All we are asking for here is an amendment to give a new employee—and I stress 'new'—a 24-month period to decide whether they wish to stay in a defined benefit fund. Minister, you are correct in your response to us that they would not be allowed to join after that date. You said that was something that was reducing choice over all, but do you accept the difficulty of administering a defined benefit scheme? When people are joining just prior to retirement, the idea that they should not be able to join after the first two years is based on the actuarial needs to manage the fund. Do you accept that that is an important characteristic of defined benefit schemes?