The current default superannuation fund regime overseen by the Fair Work Commission represents nothing more nor less than a distribution channel for industry funds, according to Financial Services Council chief executive, John Brogden.
Brogden has told a debate forum at the National Press Club in Canberra that the Fair Work Commission must be removed from the default fund process in circumstances where what had been established by the previous Labor Government was not so much a safety net as "a racket"
Further, Brogden argued that by opening up the default funds regime to genuine competition, the Government could effectively drive down fees.
"I want to strip away the debate and show the Fair Work Commission default superannuation process for what it really is — a distribution channel for the industry funds," he said. "Why else would Industry Funds today launch a desperate, farcical and extraordinarily hypocritical proposal to restrict one class of superannuation funds from the opportunity to provide Australians with low cost, high performing retirement funds?"
"The Government has a genuine opportunity to further reduce fees in superannuation and boost member returns by opening up the default superannuation market to competition. In its final days the previous Government legislated a conflicted and anti-competitive process for selecting default superannuation terms in modern awards."
Brogden said that while the former Labor Government had legislated that the Fair Work Commission must review every super fund in all 122 modern awards and select new funds, the FWC process allowed only unions and employer organisations to make submission into which fund is selected for each award.
"The previous Government chose three experts to sit on the review panel, two of whom have had to stand aside due to potential conflicts of interest. One of the ‘experts' appointed was on the Board of an industry super fund. The current default superannuation process is conflicted, anti-competitive, and must be abolished. It is not a safety net — it's a racket!" Brogden said.
"The FWC process delivers industry funds monopoly control over $9 billion in annual flows of default super contributions," he claimed.
