Safe to extract default funds from awards - roundtable
The success of MySuper in driving up standards combined with the increasingly proactive communications approach of many industry funds has created an environment in which default superannuation can be safely removed from awards.
That was the assessment of a panellists on a recent roundtable conducted by Money Management's sister publication, Super Review, with Towers Watson managing director, Andrew Boal and Deloitte Partner, Russell Mason, agreeing that while some protections were necessary the development of MySuper products had changed the equation.
Former Superannuation Complaints Tribunal (SCT) chairperson and current super fund trustee director, Jocelyn Furlan argued that protections were needed particularly in circumstances where some institutions were prepared to use their superannuation products as loss-leaders for other arms of their business.
"… I think there is a real issue about what the system looks like if some of the protections are taken away, where you've got funds that do other things as well and can use their superannuation fund as a loss leader for something else," she said.
Furlan said that institutions could "actually influence employers to join a fund not because that fund is right for their employees, but because there are possibly ancillary benefits because it's a big retail organisation that has other financial relationships with that employer".
However both Boal and Mason said that while protections were needed, the MySuper regime together with a more proactive approach by many industry funds had changed the dynamic.
"My Super has set the bar at a certain level. APRA have really regulated what's an acceptable superannuation fund with the My Super licensing. My view is that should be enough. That if they're eligible under the My Super license then they should be eligible to be considered by an employer as a default fund, and it's up to the individual funds, retail and industry, to sell the merits of their fund to employers," Mason said.
"…industry funds, to their credit, have been doing that. Most haven't just been sitting back on their laurels and saying we've got employees locked in because of an Award system," he said. "They go out there, they sell themselves to the employers, they sell themselves to the members. I think that's a healthy competition."
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