So here’s an interesting question. Why do we need to list default funds if we have the MySuper regime and stronger governance?
I have been told by people in the industry that I am ‘brave’ to come out publicly against the default system. Come on guys, let’s get a grip. Aren’t we all here for the benefit of the member. It seems to me that it is constructive to have a debate about default funds. Most people would agree that compulsory superannuation has led to lower costs and greater accountability to members. But we can’t look back, the new Stronger Super regime has reset the competitive landscape and we need to make room for new innovative products. The new governance regime also clearly establishes the trustees as the advocates for the member.
I have argued in this report Default Super and the New FWA that the new default fund listing requirements in the Fair Work Act are anti competitive because they will restrict the ability for new MySuper products to be listed. The two stage process for selecting default funds to apply from the 1st January 2015 will effectively entrench the existing default funds into the system for the foreseeable future. And the foreseeable future is a long time. I’m an actuary and I should know!!
Further, the removal of the grandfathering arrangements could see many members being transferred to inferior funds.
Employers should simply be required to select the MySuper fund that best suits their needs. The Trustees will do the rest.
