Default options are likely to increase competition in the superannuation sector even where only a minority of industry members are covered by modern awards.
At an Association of Superannuation Funds of Australia (ASFA) briefing, Independent Education Union general secretary John Quessy said that default options are likely to open up competition between superannuation funds, but it is unlikely to heavily impact the sector.
“In terms of whether or not it opens up competition it potentially does, but I don’t think largely the industry funds that are represented as default funds in modern awards rely very heavily on the default option for their clientele,” Mr Quessy said.
Despite modern awards comprising a minority in many industry sectors, Mr Quessy said that many larger funds might look to become default options in the 122 modern awards, in order to dominate the industry.
“Large funds and not industry funds will make a greater effort to be mentioned in modern awards, and there are a couple of reasons for that,” he said.
“One, is that they’re looking for business and the other is if you’re in, you fill one of the ten spots and therefore leave someone else out.”
Barrister Anthony Britt said that superannuation funds looking to be default options when government reforms take place this year should start having discussions with their relevant industry before the MySuper start-up of July 1.
“Obviously the industrial parties can agree to a list, as assuming the funds fall within stage one, that will be a very powerful argument for the fair work commission to adopt the agreed position of the industrial parties,” Mr Britt said.
“In my opinion, superannuation funds, if they want to be on the list they should start to address the particular criteria sooner rather than later, and if they want to be included on a modern award they should start discussing that matter with the relevant industrial party if they haven’t done so to date.”
