The Federal Government is committed to opening the default super fund system to all players stating it would benefit all members and drive down fees, which have not fallen in line with expectations.
Addressing the inaugural Workplace Super Specialists Australia (WSSA) conference in Sydney yesterday, Frydenberg said the Government was “fully committed to increasing competition in the default superannuation market”.
“I firmly believe in the benefits of competition and its power to put downward pressure on fees and increase quality of super products. MySuper is a strong step in right direction,” he said.
Frydenberg said further competition was required with the Financial System Inquiry finding that superannuation fees have not fallen as much as expected given the increase in size and scale of the super sector.
“Between 2004 and 2013 super fees only fell by 20 basis points while size of average fund increased by twelve fold,” he said
“We are committed to opening the market to competition which will require consideration of an alternative of the current poorly conceived Fair Work Commission process and selection of default funds in awards
“In considering what will be put in place the Government will ensure all MySuper products will be of highest quality, not just those under awards, and also ensure the wider regulatory framework is robust and appropriate to move to an open market.”
He said this would include an examination of existing protections against funds or related parties offering inducements, or inappropriately influencing employers’ choice of fund through threat of industrial disputation.
“We will put in place a framework with the strongest possible competitive forces, for the benefits of every member and see this as the most significant reform opportunity in superannuation.”
Frydenberg also stated the Government would push to clarify the definition of intra-funds advice as the last part of the refinements to the Future of Financial Advice (FOFA) reforms that it was seeking.
He said the definition of intra-fund advice would covered under the Superannuation Industry Supervision (SIS) Act and would deal with any issues around conflicted remuneration as well.
“Once these refinements are fully legislated FOFA should be considered as settled and given time to work.”
