The Corporate Super Specialist Alliance (CSSA) has joined the Financial Services Council (FSC) in rebuking Industry Super Australia’s (ISA) claims that making MySuper funds default funds will bring excessive costs and expensive red tape.
CSSA president Douglas Latto said that if a MySuper fund could be a default fund, it means employers would not have to look for a new provider and would stay with their current fund, thus avoiding search costs and red tape.
Latto said some funds are under multiple awards currently and each award has a different default fund requirement.
“This means employers may currently be paying a number of different funds because the award forces them to have different defaults for different groups of employees,” he said.
The CSSA also said the Fair Work Commission should not be responsible for selecting default super funds for inclusion in industrial awards.
“With the greatest respect, we do not think the Fair Work Commission has the expertise or experience to do this kind of work. We are giving responsibility for millions of dollars of consumer retirement savings to people who have no expertise in choosing funds,” he said.
The comments come after the ISA opposed the Government’s scrapping of what it termed the MySuper “quality filter”, which helps employers select default super funds for their employees.
As it stands, the “quality filters” apply to all MySuper funds, restricting the choice for employers to between two to 15 funds, instead of 120 My Super funds without the filter.
Latto said allowing any MySuper fund to be a default fund would also bring back a fair market and a level playing field.
“We utterly reject the concept of a 'quality filter’ which narrows the universe of default funds down to a mere handful,” he said.
Supporting comments by FSC senior policy manager Blake Briggs, Latto said this was uncompetitive and removed innovation from the marketplace because there would be no need for innovation.
