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FSC ramps up default fund reform calls
The Financial Services Council has renewed its call to the Federal Government to abandon the current Fair Work Commission-based regime for the selection of default funds under modern awards.
Utilising the reasons for the Fedeal Court’s ruling that the current FWC expert superannuatinon panel was invalidly constituted, the FSC called on the Government to change the selection regime as a matter of urgency,
By contrast, the Australian Institute of Superannuation Trustees called on the Minister for Employment, Seantor Eric Abetz to prioritise the appointment of new members of the FWC expert panel to allow the default fund selection process to resume as soon as possible.
FAIST chief executive, Tom Garcia claimed the Government needed to prioritise the appointment of new members to the panel because it was critical to protecting members’ interests.
“There are many factors to consider for a fund to be nominated into an Award,” he said. Selecting the right default fund for a particular group of employees or workplace requires careful consideration and the process must be rigorous and transparent.”
However FSC chief executive, John Brogden claimed the Government needed to act to end the current default fund selection regime by making all complying MySuper products eligible for selection.
“Superannuation funds that offer competitive products and provide good service to their members have nothing to fear from competition,” he said. “The closed shop of default superannuation is a risk not just for individuals who will have lower savings in retirement as a result of less competition, but for the Government which will ultimately bare the cost of lower fund balances in retirement through paying more in Age Pensions.”
Mr Garcia said it was unrealistic and impractical to expect employers to be able to make an informed choice about the best default fund for their employees, given that there were more than 100 MySuper products to choose from.
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