FWC super process to cost $400 million in duplication
The Fair Work Commission's (FWC's) default superannuation fund selection process would cost fund members $400 million in unnecessary duplication, according to research commissioned by the Financial Services Council (FSC).
If allowed to proceed, employees under modern awards would have to pay $150 over two years in additional fees and insurance premiums, the research showed.
The FSC commissioned research firm Rafe Consulting to calculate the costs of the process it has vocally-opposed and found at least 2.25 million employees would be redirected into new super arrangements.
It also discovered around 100,000 employers would be called on to redirect super contributions on behalf of some or all of their employees.
The FWC's legislation requires modern awards to have between two and 15 default MySuper products, beginning in January 2015.
FSC CEO John Brogden said the research demonstrates the urgency of reforming the default super system.
"These unnecessary costs to employers and employees may be incurred as early as 1 January 2015 unless the Government acts to reform the process before the FWC review is completed."
"The closed shop of default superannuation is a risk not just for individuals who will have lower savings in retirement as a result of less competition, but for the Government which will ultimately bare the cost of lower fund balances in retirement through paying more in Age Pensions."
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