The Productivity Commission (PC) has made clear that it will be delving deeply into the competition and transparency issues surrounding the selection of default superannuation funds under modern awards.
The PC’s direction has been outlined in an issues paper released this week, which also makes clear the degree to which the future of default funds under modern awards is directly linked to the implementation of the Government’s Stronger Super policy, particularly MySuper.
On the question of the current selection process for default funds under modern awards, the PC paper asks four key questions:
- Is the process transparent?
- Is it competitive?
- Is there a level playing field between industry and retail funds?
- Is there a level playing field between domestic and international funds and should there be?
"If not, what are the barriers to transparency and contestability? What are the effects of these barriers on member outcomes?" the PC paper asks.
The document also raises the key issue of whether industrial judiciary in the form of Fair Work Australia should be a part of the process of selecting default funds.
"Is there a case for an organisation other than FWA [Fair Work Australia] to assess the eligibility of funds against any selection criteria?" the paper asks.
"What should be the role of the industrial parties to the awards? What should be the role of FWA?"
Commenting on the release of the position paper, the Australian Institute of Superannuation Trustees (AIST) chief executive Fiona Reynolds said the questions raised by the PC highlighted the complex issues that needed to be considered.
She said this included the question as to whether additional criteria were required over and above those for new MySuper funds.
Reynolds said AIST expected to be an active participant in the inquiry and would argue strongly that default fund selection was a matter for workers and employers to decide through the industrial award process.
