The Government has directed the Productivity Commission (PC) to conduct an inquiry into default superannuation funds in modern awards – something Labor promised as far back as 2010.
The PC has been instructed to lay down the rules for the assessment of superannuation funds eligible for nomination as default funds in modern awards by Fair Work Australia.
The move has been welcomed by the financial services industry. Financial Services Council chief executive John Brogden said the current process for selecting superannuation funds in awards was “a closed shop, anti-competitive and failed to protect consumers”.
“Opening the default market to competition and creating a level playing field between all MySuper funds is crucial to ensuring fees continue to be driven down,” Brogden said.
Changing the rules would allow retail funds to compete for awards, which would break the “industry fund monopoly” and allow competition to “flourish”, Brogden said.
The announcement was also welcomed by AMP managing director Craig Meller and BT Financial Group head of superannuation Melanie Evans.
“There is also a need to introduce greater transparency around the ongoing performance of funds listed inside modern awards,” said Evans.
Paul Costello has been appointed as a part-time associate commissioner to assist in the inquiry, according to Assistant Treasurer Mark Arbib.
The inquiry will begin in early February could last as long as eight months.
