The alternative superannuation default models proposed by the Productivity Commission could put consumers at further risk of being sold poor products by banks and other for-profit providers, Industry Super Australia (ISA) believes.
ISA’s chief executive, David Whiteley, said the models ignored the systemic underperformance of funds offered by for-profit providers and increased the ability to sell consumers poor products.
“The draft report does not address the cross-selling of for-profit funds, or the divided interests of bank-owned and for-profit funds to deliver both shareholder profits and member returns,” he said.
“Strong protections are needed for consumers to limit the behaviour of these funds to ensure that member interests are the sole focus.”
Whiteley said a strong default system should protect disengaged workers who did not have the resources or expertise to make informed decisions on where best to place their retirement savings.
Australia’s second-largest super fund has confirmed it is expanding its presence in the UK following significant investment in the region.
A member of the super fund has approached ASIC to investigate potentially misleading or deceptive representations by UniSuper regarding the holdings of its sustainable portfolios.
The median growth fund delivered 1.9 per cent in March, adding to the “stunning” rally that has seen super funds gain 11 per cent since November.
Vanguard has affirmed its support for the current super performance test, emphasising the importance of keeping the process straightforward.
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