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CFS maintains argument for MySuper selection process
Despite the Australian Prudential Regulation Authority (APRA) suggesting not all MySuper funds have been created equal, Colonial First State (CFS) is arguing that all MySuper products should be capable of selection as default funds.
The CFS submission lodged as part of the Productivity Commission's (PC's) review of alternative default models, has reinforced the company's position stating, "we believe employers should be permitted to select any MySuper product as the default superannuation fund for their award employees".
It pointed out that superannuation funds were now required to have an APRA-authorised MySuper product in order to receive compulsory employer contributions and that, "given the rigorous and costly process of designing MySuper products and then achieving APRA authorisation, we believe this is the simplest and most effective framework for default arrangements in the future".
"This model is expected to result in incremental industry consolidation, further increasing opportunities to achieve greater economies of scale in the industry," it said.
The CFS submission said APRA's MySuper authorisation process also meant that the Fair Work Commission's current approach to selecting default superannuation funds within employment awards was unnecessary.
"We have previously raised concerns during the Financial System Inquiry (FSI) that the process of applying to another body for the right to compete to provide default fund services is duplicative and inefficient, whilst also imposing unnecessary cost on funds," it said.
"We submit that all employers and employees should have an equal opportunity to access our high-quality and appropriately governed superannuation products and services. This should occur on a level-playing field and in an open and competitive marketplace.
"In order to efficiently achieve this under the current settings, we recommend that the law is amended to allow an employer to select any MySuper product as the default superannuation fund for their award employees."
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