Industry Super Australia (ISA) has begun describing default funds under modern awards as a "superannuation safety net" for workers who do not actively select their own fund and something which has been backed by three separate Government inquiries.
The ISA has initiated a campaign in which it is claiming that the big banks are seeking to undermine that safety net.
The campaign appears to be aimed at directly countering the arguments of the Financial Services Council (FSC) that the default funds regime should be opened up to competition with all elgible MySuper funds available for selection.
However, ISA chief executive, David Whiteley issued a statement late last week in which he sought to claim that three inquiries had specifically backed the existing default funds under modern awards regime.
He claimed complexity, choice overload, low levels of financial literacy, lack of planning, procrastination and high search costs, among other behavioural factors, were influencing Australians' approach to their superannuation savings.
"This is the lived reality of our super system, in which eight in ten people don't actively select their own fund," he said and claimed that there had been consensus on the issue by the Cooper Review, the Productivity Commission and the Financial System Inquiry.
"These independent inquiries agree the existing safety net of better performing funds should remain in place and be subject to a ‘quality filter'," he said. "This default system has been overseen successfully for many years by the Fair Work Commission and implemented throughout awards and workplace agreements for people who don't actively choose a fund."
Whiteley claimed that despite this, "bank-owned super funds are continuing a campaign to scrap the safety net".
"The banks, which already dominate 80 per cent of the household banking market, are now seeking a greater share of the superannuation market," he said. "However, because of their inability for more than a decade to match the returns of the industry super fund sector (on average), bank-owned super funds want to avoid any obligation to compete on investment performance."
