Default Superannuation Funds
The Royal Commission into Trade Union Governance and Corruption has recommended a significant expansion of choice of super fund for employees, going further than its own draft report.
Industry Super Australia has launched a campaign against banks offering incentives to employers to encourage switching the default super fund for employees to a bank-owned retail super fund.
Assistant Treasurer Josh Frydenberg says that ‘true competition’ is needed for the superannuation system to reach its full potential.
Industry Super Australia says a majority of Australians think bank-owned retail superannuation funds are focussed on making profit, not the retirement savings of members.
Superannuation fees are too high, according to the Financial Services Council, with more competition among super funds needed.
Industry Super Australia says that opening up the default superannuation fund process would add red tape costing $1.8 billion.
Industry Super Australia and the Financial Services Council are engaged in a battle over which super funds can be default super funds and the manner in which they are chosen. One option is to have employers choose a super fund from an “unranked list of 120 MySuper funds.”
A report by independent think tank the Grattan Institute, calling for a competitive government-run tender to select default superannuation funds, has reignited the fight between the Financial Services Council and Industry Super Australia over default funds.
The Grattan Institute recently released a report calling for the Government to implement a tender process to select default superannuation funds, saying this could save $1 billion in fees a year.