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Default review costly and may force MySuper closures
The Federal Government has reinforced its concerns around the Fair Work Commissions's (FWC's) default fund processes, acknowledging the possibility that some small MySuper funds may be forced to close if the FWC takes a "narrow stance" in selecting default funds under modern awards.
The acknowledgement that some small MySuper funds might close has come from the Minister for Employment, Senator Eric Abetz, in answers to questions on notice about how the FWC has been handling the default funds process.
Tasmanian Liberal Senator, David Bushby had questioned the minister on the possibility of MySuper funds being forced to close in the context of what he said were claims by two small industry funds that they had already complied with an extensive set of procedures imposed by the Australian Prudential Regulation Authority (APRA).
Senator Abetz made clear he believed the FWC processes, when added to the already-complete APRA processes, were onerous for superannuation funds offering MySuper products.
"The review process is additional to the authorisation of MySuper products by the Australian Prudential Regulation Authority, and so in effect there are three stages of assessment before a superannuation fund can be specified in an award," he said. "I have expressed concern in the media of the Default Superannuation Review, particularly given the issues around the appointed members to the Expert Panel by the former Government."
The minister also referenced the $45 million figure suggested by the Financial Services Council as the cost to the industry of complying with the default fund process and added, "I expect the cost to Government of the review in Expert Panel Member remuneration alone to run into the tens of thousands of dollars, let alone the support work by staff of the Commission".
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