Amid cries that removing the quality filter from MySuper funds will create even more red tape; one organisation disagrees and believes the result will be the contrary.
The Corporate Super Specialist Alliance (CSSA), which represents corporate superannuation specialist advisory businesses, categorically disputes claims that the government consideration to make any MySuper fund a default will result in unnecessary red tape.
Rather, it will result in cost savings and less hassle for employers, it said.
This is because if any MySuper fund can be made into a default fund, most employers won’t have to go in search of a new provider when the ability to grandfather existing contribution arrangements expires, and will instead be able to stay with their current fund.
CSSA president Douglas Latto told Wealth Professional
that if these employers are forced to ditch their old funds and choose between a selection of just 2 to 15, it will put a huge strain on business.
“Literally thousands of employers will be forced to the markets. Everyone will miss out,” he said.
Latto disagrees with claims made by Industry Super Australia (ISA) that making any MySuper fund a default will add “a minimum of $160 million in un-necessary red tape costs to employers of all sizes”.
“I have no idea where that figure comes from unless they think every employer will go to the market. It’s the opposite,” he said. “We would say absolutely [removing the quality filter] saves money, and in a very significant way.”
It would also mean a fair market and level playing field, unlike the result of a quality filter which narrows down the default funds to a handful, forcing people to invest in them and removing competition and innovation, Latto said.
The CSSA is also concerned that the Fair Work Commission is responsible for overseeing the quality filter, because it feels the commission doesn’t have the necessary experience.
“Our members, for example, are specialists in helping people select super funds and they spend years and years doing it. I don’t see how the Fair Work Commission can walk in after a few months. It’s like getting your handyman to do your electrical work,” said Latto.
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