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The Australian Institute of Superannuation Trustees (AIST) wants the trustee structure of all default funds modelled on the not-for-profit model and a regulatory framework capable of identifying and removing underperforming funds.
In a submission to the Cooper Review, the AIST claimed that in circumstances where around 80 per cent of members have their super invested in default funds, the AIST believed default arrangements warranted special treatment.
However, at the same time, the submission strongly argues for tighter regulation of self-managed superannuation funds (SMSFs).
It said that while some might argue SMSFs represent the ultimate alignment of member and trustee interest, AIST believed this might be overshadowed by governance shortcomings in the SMSF sector.
The submission said that on the basis of the shortcomings, AIST had identified it believed SMSFs should come under the jurisdiction of the Australian Prudential Regulation Authority in the same manner as conventional funds.
Commenting on the submission, AIST chief executive, Fiona Reynolds heavily promoted the concept of the not-for-profit model becoming a template for default funds.
“We know that most super fund members are disengaged and are unlikely to switch out of the default fund, which is why we believe these funds warrant special treatment,” she said.
