ISN weighs into default super debate

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The Industry Super Network (ISN) has claimed that new legislation allowing a Fair Work Commission panel to make the call on approving default super products will create an “open and transparent default fund system”.

ISN CEO David Whitely said that the new legislation will ensure that default funds are selected on merit – and Australians’ retirement savings are largely protected.

“The Productivity Commission recognised that the default funds named in modern awards have generally outperformed other superannuation funds,” he said.

“The Government’s announcement places the interests of members ahead of others and establishes net returns as a primary consideration for the naming of default funds in modern awards.

“We welcome an open and transparent system where the listing of a default fund in an award is based on merit.”

He added that employers have argued for a system that doesn’t place the burden and cost of default fund selection upon themselves, and that therefore the announcement that a Fair Work Commission expert panel will undertake this process is welcome news.

“The assessment of funds by the Fair Work Commission according to a set of established criteria will ensure that all funds are considered on the same basis and will not place undue burden on employers to make their own judgements on such an important issue,” he said.

“The new default super process will help instil confidence in superannuation and underpin a working safety net that is critical to our compulsory superannuation system.”

More stories:

Shorten’s default super changes introduced

Shorten accused of protecting union interests

  • Alex Warren on 1/11/2012 11:02:39 AM

    Superannuation is not well regarded with the Australian public for a very good reason. People are disengaged with super partially because of default fund. We should get rid of the notion of default fund and put the onus on the individual to choose their own fund and become more involved in super. It is also worth noting that comparing returns of industry funds to retail funds is a bit of smoke and mirrors and in reality they cant be compared this way. Most industry funds returns are based on a crediting rate. The crediting rate includes the tax rebate for fees and insurance commission, this inturn if you were to take the crediting rate as a return compared to retail funds over inflates the crediting rate. I did some sums with sunsuper recently and this amounted to close to 1% extra to the crediting rate. That is sigfinicant in itself. Asset allocation decision however is the main determinant in return. Most industry funds have a home bias to Australian equities where many retail funds have more diversification with international equities. The past 10 years Aus equities have significantly outperformed international equities. No one knows going forward what the future will bring but if international equities outperform the Aus market we may well find us having the same discussion but with the shoe on the other foot.

  • mark longhurst on 1/11/2012 11:18:28 AM

    whatever happened to choice legislation ? The main reason these default funds are being given this space is because the organisations using them refused to allow choice when the legislation was in, large groups, gov bodies and unions would NOT allow their employees choice,flouting the laws, where was ASIC then?

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