Mr. Tim Duggan:

The Senator is absolutely right. As I acknowledged, at least at the beginning this will be an additional cost on employment. It is a relatively low level, at 1.5%. All studies show that when it is done on an incremental basis over a decent period of time it becomes part of the normal remuneration negotiations and packaging. Therefore, that cost element should dissipate over time. However, the Government and the Minister are conscious that it is, even though it is relatively small, an additional cost in the beginning. That is why that phasing was done. It was to mitigate the impact of that additional cost as much as possible.

Somebody with an existing scheme who wishes to transfer it into My Future Fund will not be facilitated at the beginning. The whole focus has been on getting the system up and going for the 750,000 people who have nothing. That will be the concentration at the beginning. However, there is a design principles document behind this scheme that the Government approved in 2022. It is publicly available but I will send it to the clerk to the committee so that members can all have a look at it if they wish. It sets out what future phases of the scheme may facilitate. One of them is that very thing, which is allowing transfers into and out of My Future Fund, if somebody were either to join an occupational scheme or were to move country and needed to move it. The intention is, once we have the system in, bedded down, operating well, and NAERSA has the capacity to start looking at options for expanding and enhancing the scheme, that one of those options would facilitate transfer in and out. That will come in time.

On the risk strategies and advising people on it, I said that the scheme facilitates choice but does not require it. We expect that the vast majority of people are unlikely to exercise choice at all. That has been the experience with auto-enrolment systems around the world. We expect that well north of 90% of people will not exercise that choice. That means people will go into the default strategy, which is lifestyled, as I said. If they are under the age of 51, their money will be invested in the higher risk options. In the main, those are equities, usually on a global basis. Once they reach the age of 51, their money will be transferred into medium-risk options. Typically, these are built, either on a 50:50 or 60:40 basis, on equities and bonds. The bonds can be made up of government bonds or corporate bonds, but they are primarily government or sovereign bonds. Once people reach the age of 61, their money will be transferred into low-risk funds, which are primarily government and European government bonds.

Employers will not know that and will not need to know it. It is not the job of employers, under My Future Fund, to provide advice to their employees on the structures, formats and options available in My Future Fund. It is NAERSA's job to do that. NAERSA will have comprehensive information on all of these matters on its portal, which people will be able to access. It will also make loads of information available through social media and, if needs be, and people prefer to receive information that way, it can be made available on paper. It is possible that NAERSA may use distribution networks throughout the country to allow leaflets, brochures and things of that nature to be distributed as well. We expect, however, that the majority of people are likely to engage electronically with NAERSA and use its portal systems.