The former Labor government's legislation where the Fair Work Commission (FWC) should review every super fund in all 122 modern awards and select new funds is not a safety net, but a racket.
Financial Services Council (FSC) CEO John Brogden made the comment in a speech to the National Press Club yesterday, and added the current default super process is anti-competitive and conflicted, and should be scrapped.
Brogden said the Fair Work Commission (FWC) default super process is simply a distribution channel for industry funds, and called it an industry fund "monopoly".
He said the FWC process gives industry funds control over $9 billion in annual flows of default super contributions.
"Why else would industry funds today launch a desperate, farcical and extraordinarily hypocritical proposal to restrict one class of superannuation funds from the opportunity to provide Australians with low cost, high performing retirement funds?" he asked.
"Dictating which super fund employers must use is an insult to the intelligence of every employer in the country."
He also said the FWC process only lets unions and employer organisations lodge submissions into which fund is selected for each award.
Brogden opined the Australian Prudential Regulation Authority (APRA) is the appropriate body for reviewing MySuper products rather than an industrial arbiter.
He also argued employers should have the freedom to choose from all APRA-approved MySuper products that suits their employees.
In relation to governance, Brogden re-emphasised the need for a majority of independent directors and independent chair on super trustee boards.
"The Fair Work Commission process is a closed shop.
"So long as the Government allows trustee boards to continue with equal representation between unions and employers, and for the FWC to continue to choose default funds at the behest of unions and employers, there will continue to be an untenable conflict of interest," he said.
