The Productivity Commission (PC) has signalled its views with respect to default funds under modern awards, stating that some of the original rationales for the current default architecture are no longer as relevant today.
In an issues paper released today dealing with alternative default models, the PC has backed its analysis stating that the system has matured significantly over the past quarter century, with accompanying improvements in transparency and compliance.
"Australians are much more familiar with the concept of superannuation and its workings. However, retirement decision-making remains very complex," it said. "Having no defaults is our preferred, objective baseline for this inquiry."
The issues paper then goes on to state that "alternative allocative models" will be assessed against the baseline position that no defaults ought to be the preferred position, but in doing so the current default selection process could be assessed in a similar way later in the process.
"All alternatives to the baseline could bring potential costs and benefits, and the assessment would need to examine who bears these costs, as well as who reaps the benefits of the alternatives," it said.
The Commission said it proposed to assess alternative models against five criteria:
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