The Industry Super Network (ISA) has urged the Government not to scrap the MySuper “quality filter” that assists employers in selecting default super funds for their employees.
Under the current rules, so-called “quality filters” are applied to all MySuper funds, narrowing the choice for employers to between two to 15 funds. ISA has pointed to the Government’s suggestions that it is considering removing this filter, which would require employers to choose from 120 MySuper funds.
According to ISA’s estimates, the move would add a minimum of $160 million in “unnecessary red tape costs” to employers of all sizes, due to the due diligence needed to select a super fund.
“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 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.
