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ISA urges Govt to leave MySuper filter
The Industry Super Network (ISA) has called the Government to reconsider leaving in place quality filters that assist employers in selecting default super funds for their employees.
The Government had said it was considering removing the quality filter as proposed by the Productivity Commission, which would require employers to choose from more than 120 MySuper products.
Under the current rules, a quality filter overseen by an expert panel of the Fair Work Commission is applied to MySuper funds, narrowing the choice for employers to between two to 15 funds.
ISA estimated removing the filter would result in an additional $160 million in costs to employers of all sizes and claimed the majority of this would be borne by small businesses.
“Asking any person to select a superannuation fund from over 100 options is absurd. It places unreasonable search costs on employers,” said ISA chief executive officer David Whiteley.
“Employers have consistently stated that they do not want the responsibility of choosing the default super fund for their employees, nor necessarily have the time of expertise.”
ISA has pointed out that retail super funds are advocating for the removal of MySuper quality filters and has cast doubt over the reasons behind their lobbying efforts.
“Retail super funds - typically owned by banks - which have on average under-performed industry super funds, are advocating that quality filters be removed, and the burden of selecting default super funds loaded onto individual employers,” ISA said in a media statement.
“This will reduce competition on long-term net investment returns because the quality filter places an emphasis on long-term returns.”
The industry body pointed to SuperRatings’ figures showing industry super funds have outperformed retail funds by an average of over 1.3 per cent for the year to 31 December 2013.
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