Draft MySuper amendment clouds Productivity Commission findings

On the eve of the Productivity Commission delivering its draft report on default funds under modern awards, legislation amending the Government's Stronger Super bills has emerged which, if passed, would appear to enshrine many elements of the current default superannuation fund regime.

The Productivity Commission released its draft report today - a document which recommends that approved MySuper funds be eligible for selection as default funds with respect to modern awards.

However a draft amendment to the Superannuation Legislation Amendment (MySuper Core Provisions) Bill 2011 emerged this week which appears to narrow the options of employers, particularly large employers, when selecting MySuper funds for their employees.

There were industry concerns that the amendment would be brought on for debate in the Parliament before it rose for the winter recess, but the workload in the House of Representatives means it will not be dealt with until Parliament resumes in six weeks' time.

There is concern in the financial services industry that the legislation has the capacity to shore up many of the perceived advantages enjoyed by industry superannuation under the current default funds arrangements overseen by Fair Work Australia.

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The Productivity Commission draft report calls for default funds under modern awards to be chosen by Fair Work Australia or an independent body.

If the Government were to accept a Productivity Commission recommendation that all approved MySuper funds were eligible for selection as default funds, this would open up scope for major retail players such as AMP and Colonial First State.