The federal coalition has rejected claims by employer groups that allowing a greater range of super funds to compete as default funds within modern awards will bamboozle employers and add another layer of red tape to managing employees.
The Australian Hotels Association (AHA) has told the Productivity Commission that opening up the selection of default funds to a broad cross-section of super products will overload employers with options, adding to the mountain of current employment regulation.
“Expanding [the] lists of eligible default funds in modern awards risks overwhelming employers, particularly those in the hotel industry who are already subjected to a myriad of time-consuming regulations in other areas of their business,” the AHA said in a submission.
The National Tourism Alliance expressed similar concerns about allowing too much competition for funds. “We . . . do not wish to see further complex decisions imposed upon tourism businesses who are not necessarily equipped to make such decisions,” it said.
Coalition treasury spokesman Mathias Cormann rejected the claims, saying real competition in the default fund market would deliver benefits for both employers and employees.
“Genuine choice and competition in default super arrangements will deliver better value for employers and employees,” Senator Cormann said.
“If employers like the AHA are satisfied with the performance and service offering from their particular industry super fund, nothing will change for them in practice.
“No employer will be obliged to change default fund.
“But in a truly competitive environment, current default fund providers will have a stronger incentive to keep their performance up, while new providers may come up with better ways to deliver value.”
He said only a full transparent and open default fund market could ensure value for Australian workers.
“Genuine competition in a transparent market will drive product innovation in the default fund market within an appropriate framework from a consumer protection point of view, helping to ensure that value for super fund members is maximised,” he said.
“We need the most efficient, transparent and competitive superannuation system possible to ensure as many Australians as possible can achieve self-funded retirement.”
The coalition has continually expressed concern that the Productivity Commission review will not persuade the government to change the default fund regulations to allow a broader range of MySuper products to be eligible.
“Even after the Productivity Commission has finally reported, we have no confidence that Labor will then act on any recommendations and ensure an open, transparent and competitive process for the selection of default funds under modern awards,” Cormann said.
