POWERED BY MOMENTUM MEDIA
New default fund selection a ‘storm in a teacup’
Industry funds typically don't rely on their default option for membership growth, says Independent Education Union general secretary John Quessy.
Addressing an Association of Superannuation Funds of Australia luncheon in Sydney this week, Quessy said the debate about the selection of default funds in modern awards is most likely a "storm in a teacup".
Quessy accepted that the incoming changes to the selection of default funds had the potential to open up more competition in the industry.
Many modern awards currently list only three funds, and that is likely to be increased to 10 when the Government's changes come in at the beginning of 2014, he said.
But according to Quessy, the real question is: "Does it matter?"
"I don't think the industry funds that are represented as default funds in modern awards rely very heavily on the default option for their clientele," he said.
A default fund only comes into play for employees who are covered by a modern award and do not choose their fund, Quessy said.
Those people generally constitute a small pool of employees — or "perhaps even a puddle", he said.
"In my industry that is the case. There would be less than 1 per cent of people in our industry in NSW who are covered by the modern award," Quessy said.
But he accepted that there were a few industries where most employees were under a modern award.
Quessy, who is the former trustee of NGS Super, said that in his experience of enterprise agreements there are generally one or two superannuation funds listed as the default.
"I guess in the process of bargaining — from the union perspective — we largely have an affinity to a particular industry fund. And that's the fund that we would promote, generally because we were involved in setting it up," he said.
"The provider's strong, and we think they've provided excellent returns and excellent service for their members," Quessy said.
He concluded by asking the superannuation trustees in the audience: "What percentage of your FUM do you get from these default processes? I'm not sure that anyone actually knows the answer to that".
AUTHOR
Staff Writer
Money Management staff writers are writers who contribute to the website from time to time. If you would like to discuss the content contained within this article please contact us.
Recommended for you
Jim Chalmers has defended changes to the Future Fund’s mandate, referring to himself as a “big supporter” of the sovereign wealth fund, amid fierce opposition from the Coalition, which has pledged to reverse any changes if it wins next year’s election.
In a new review of the country’s largest fund, a research house says it’s well placed to deliver attractive returns despite challenges.
Chant West analysis suggests super could be well placed to deliver a double-digit result by the end of the calendar year.
Specific valuation decisions made by the $88 billion fund at the beginning of the pandemic were “not adequate for the deteriorating market conditions”, according to the prudential regulator.
TOP PERFORMING FUNDS
ACS FIXED INT - AUSTRALIA/GLOBAL BOND
Fund name
3y(%)pa
1
Spire Oaktree Opportunities XI Second Close
61.07 3 y p.a(%)
2
Spire Oaktree Opportunities XI First Close USD
59.21 3 y p.a(%)
3
DomaCom Lot 21 Chellaston Road Munno Para West SA 5115 Australia
31.56 3 y p.a(%)
4
Fidante Credit Suisse Global Private Equity
31.06 3 y p.a(%)
5
DomaCom 4/27 Crombie Avenue Bundall QLD 4217 Australia
26.81 3 y p.a(%)
