FSC argues for removal of industrial parties from super
The Financial Services Council (FSC) has renewed its call for all MySuper funds to be eligible for selection as default funds under modern awards and for the industrial relations judiciary to be removed from the default fund selection process.
Delivering his opening address to a Productivity Commission hearing in Melbourne today, FSC chief executive John Brogden also outlined research which he said confirmed that small and medium sized employers did not want help from industrial relations when picking default funds.
Brogden said that with the MySuper regime in place, permitting employer choice represented the most critical element in improving the default superannuation fund system.
Further, he said that with the advent of MySuper arrangements approved by the Australian Prudential Regulation Authority, the continuation of default fund listings in awards "is not necessary".
Brogden said the MySuper reforms also eliminated "the need for any Fair Work Australia process in order to be eligible as a default fund under an award".
"We therefore believe that any MySuper product should be an eligible default fund for an Australian workplace. We also believe that to conclude otherwise would be at odds with the Parliament's intention to design a safety net super product for all default super members," he said.
Brogden said that while the Productivity Commission's draft report had not recommended the removal of Fair Work Australia from the selection of the default fund selection process, it represented the best outcome.
He said it would remove both bureaucracy and cost from the industrial and superannuation system while formally removing the need for industrial parties to be part of the superannuation system.
"In research undertaken for this inquiry by Westfield/Wright, an assessment of small and medium sized employer preferences showed that such employers do not want industrial parties picking default funds for them," Brogden said. "The principle is that employers do not want another group or entity picking service providers for their businesses."
The Australian Institute of Superannuation Trustees is expected to counter the FSC's arguments, having previously argued that industrial awards are what make default superannuation funds "fit for purpose" in particular industries.
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