Employer-initiated super membership confounds Privacy Act

Mike Taylor

Managing Editor/Publisher, Financial Newswire

17 April 2023

The fact that superannuation fund membership is often initiated by an employer rather than by the member themselves may prove problematic in terms of funds meeting Privacy Act obligations, according to the Australian Institute of Superannuation Trustees (AIST).

In a submission filed with the Federal Attorney General’s Department as part of its Privacy Act Review, the AIST has said it member funds need clarity with respect to the definition of consent being “current”.

At the same time, the industry funds organisation has warned that the probability of funds receiving periodic and proactive consent from members is “improbable”.

“Superfund membership is often initiated by the employer establishing the relationship on behalf of an employee,” the submission said.

“Engagement with the superannuation sector is often described as low, particularly for younger cohorts. Due to the compulsory nature of superannuation and the effect of stapling, a member may have an account with a fund for a large portion of their working life, extending over decades.”

It said that it was against this background that AIST member funds were seeking “clarity on the expectations on the superannuation sector to obtain consent when the purpose for which the personal information is handled has not materially changed”.

“Should periodic consent be required, member funds seek guidance as a part of the Review as to what form that consent should take and whether there will be a standardisation of consent for the sector.”

“Based on trends in superannuation, the probability of super funds successfully receiving periodic and proactive consent from all members is improbable. This is due to the lower levels of engagement in superannuation,” it said.

“Should consent be conditional for continued contact with membership this may lead to members not receiving important messages about how to prepare for retirement. Those least engaged with superannuation are often the cohort that require additional messaging and support from their super funds to ensure the best retirement outcomes.”