The Federal Government needs to ensure transparency in the process around the selection of default funds under modern awards with superannuation funds being given the right to state their case, according to the Association of Superannuation Funds of Australia (ASFA).
In a submission to a Senate Committee released last week, ASFA has made clear that it sees transparency as being vital to the workings of the Fair Work Commission (FWC) around the selection of default funds from a range of MySuper products.
As well, it has stated that funds should be selected on a net investment performance benchmark with appropriate recognition given to administration, advice and investment fees as well as to the appropriateness of the insurance offering
And while the industry funds have made much about past performance, the ASFA submission said that while past performance was relevant, it "should not necessarily be a deciding factor in assessing the ability to meet a specified net investment performance benchmark".
"Some or even many MySuper products will in effect be new products and will not have an investment return history as they will have different investment allocations and fees compared to previous products offered by the fund concerned," the submission said.
Dealing with the question of the need for transparency around the workings of the FWC, the submission said: "ASFA considers that the selection process for inclusion of a MySuper product in an Award as a default fund should be:
- Open in that the provider of any generic MySuper product should be able to apply for inclusion.
- Transparent in that all the criteria for selection should be explicitly made available to all applicants.
- Fair in that the process used to determine which funds are included as a default in an award proceeds without any bias or potential bias and also allows applicants a right to be heard.
