Design of Single Touch Payroll risks unintended consequences

The Association of Superannuation Funds of Australia (ASFA) has criticised the development of Single Touch Payroll, warning the ATO and Government of unintended consequences.

One aspect of Single Touch Payroll, currently under development by the ATO, would allow employees commencing new employment to complete their superannuation standard choice form and TFN declaration using ATO Online or through the business management software of their employer.

ASFA has raised a number of concerns about this part of Single Touch Payroll, in a submission. In particular the organisation is concerned that the ATO online process will lead to people simply selecting their current super fund instead of taking the opportunity to consider their options.

“We continue to be concerned with the apparent lack of time, access to information and overall opportunity that a new employee will be given to consider their superannuation options with the current ATO design,” said ASFA.

According to ASFA, the ATO’s usability testing found mixed responses – employers and employees welcomed the streamlined process, but employees are likely to select the default employer option.

“We also observe that the current ATO design encourages the selection of an individual’s existing account (or one of them – listed alphabetically) with only limited information relating to those existing funds displayed. Furthermore, the current design does not appear to have an account consolidation feature to assist with the proliferation of member accounts. These limitations may not be conducive to informed decision making and system efficiency.”

“The potential unintended consequence of greatest concern from ASFA’s viewpoint is the risk that this process results in a reduction of member engagement potentially leading to sub optimal retirement or insurance benefit outcomes.”

ASFA says that, with the super choice changes under Single Touch Payroll, the ATO going beyond simply converting a manual form to a digital process to becoming an “investment product platform and/or service provider with the current design and it is possible that a range of competition issues and unintended consequences may arise.”

Noting that the Productivity Commission is currently considering default super as part of the inquiry into the Competitiveness and Efficiency of the Superannuation System, ASFA recommends that the inquiry be completed before significant changes are made to the existing super choice arrangements.

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