AIRC action creates super fund monopoly
The Australian Industrial Relations Commission’s (AIRC’s) action in relation to default superannuation funds has created a “virtual monopoly” for a “favoured few funds” according to Investment and Financial Services Association (IFSA) chief executive Richard Gilbert.
Gilbert has called for a review of the AIRC’s decision, which restricts the number of default super funds for employees under certain awards.
“Australia appears to be about to head down the path of locking out competition and returning to some kind of old-fashioned ‘closed shop’ regime for a favoured few funds,” Gilbert said.
IFSA has sought an urgent meeting with Minister for Workplace Relations Julia Gillard in order to explain the ramifications of the AIRC decision, “a decision that we believe must be reviewed by the Government”, Gilbert said.
“This is an extraordinary move on the part of the AIRC and could, in effect, deny workers access to some of the most cost-effective super funds in the Australian marketplace.”
IFSA is pressing for more transparency in the nomination of default funds. The association prefers that default super funds not be nominated in awards, with the alternative being non-compulsion for employers to choose the default fund specified in the award.
Gilbert said larger corporate and wholesale master trusts offer a range of products with low fees, and that “it is odd that employers should be denied access to such funds”.
IFSA pointed to recent research conducted on behalf of the association by Rice Warner Actuaries, which found that large corporate master trusts have seen the greatest reduction in fees over the past six years, as a result of competition created by employers negotiating on behalf of their employees. IFSA said more than half of the super accounts in Australia are either held in an industry fund or pay an average fee of around 1 per cent or less per annum.
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