It’s official, Bill Shorten has introduced measures that will see a Fair Work Commission panel assess which funds should be allowed to be default super contenters.
The Superannuation Minister yesterday officially introduced the measures, included in the Fair Work Amendment Bill 2012, which he claimed will improve the transparency and contestability of the selection of default funds in modern awards.
He cited Productivity Commission findings that existing default fund arrangements have resulted in net returns generally exceeding those of non-default funds. Over the eight years to 2011, for example, default funds in modern awards averaged an after-tax return of 6.4%, compared to 5.5% for non-default funds.
“The primary focus must be the interests of members, but it’s also important that the process of fund selection is transparent and contestable and workable for all parties,” said Shorten.
He added that all funds with a generic MySuper product will be able to apply for selection as a default fund on an equal basis, which he claims will bring greater contestability to the system.
Controversially, it has been decided that an expert panel within the Fair Work Commission will assess funds on the basis of legislative criteria which are based on those proposed by the Productivity Commission.
The expert panel will then decide which funds meet the criteria in an “open and transparent process”, said a statement from Shorten’s office.
“A full bench of the Fair Work Commission will then determine which particular funds from the default superannuation list are best suited for inclusion in each modern award, with the best interests of the employees covered by that particular award as their overarching consideration,” it added.
“This process will occur every four years, to align with the four yearly reviews of modern awards. It will ensure that the default funds listed in modern awards continue to be the best performing MySuper funds.”
Shorten stated that the measures reflected the Gillard government’s ongoing commitment to providing a superannuation system that operates to maximise the retirement incomes of Australian workers, and a strong and stable modern award safety net.
“Superannuation is a critical part of the Australian safety net. It provides income for working Australians in their retirement, helping them to retire in comfort and with dignity. It is therefore vitally important to make sure the default superannuation provisions in modern awards are simple and workable for employers and operate in the best interests of Australian workers,” he said.
Shorten added that the Labor government had already legislated to lift universal superannuation from 9% to 12%, abolished the tax paid on superannuation for 3.6m Australians earning less than $37,000, and abolished the age limit on earning superannuation.
Lost super: Hockey is 'peddling falsehoods'
Super reforms: Cormann blasts Shorten, Shorten blasts Hockey, Hockey blasts Swan
Shorten announces super changes