The funds management industry welcomed Treasury’s announcement last week of an inquiry into the selection of default superannuation funds in workplace awards.
However, the coalition said the government needed to hurry, given the inquiry sprang from the Cooper Review’s recommendations about 18 months ago.
“Labor promised a Productivity Commission review into this way back in August 2010,” Shadow Assistant Treasurer Mathias Cormann said in a statement.
Superannuation Minister Bill Shorten said the Productivity Commission would launch the inquiry in a bid to create a transparent set of fund assessment criteria.
He said the inquiry would start early next month and continue for up to eight months.
“There is no reason why this review should take the best part of 2012,” Cormann said.
Fund managers and their industry body welcomed the inquiry, saying the playing field needed to be level.
Financial Services Council chief executive John Brogden said the system was rife with conflicts of interest.
“Currently, the only way default funds can be added to an award is through the recommendation and agreement of employer groups and unions – an inadequate process that is riddled with conflicts of interest,” Brogden said.
“Many union and employer group representatives who decide which funds will be listed in awards are themselves trustees of the superannuation funds they recommend.”
BT Financial Group head of superannuation Melanie Evans also welcomed the government’s move.
“Australia’s superannuation pool will double from $1.4 trillion to $2.8 trillion within 10 years,” she said.
“It’s essential we get the system right. There is no margin for error on such an important issue.”
The Australian Industry Group (Ai), which represents 60,000 businesses in sectors including telecommunications and airlines, also welcomed it.
“Superannuation funds have largely been included in modern awards on the basis of their inclusion in pre-modern awards,” Ai chief Heather Ridout said.
“Many of the funds have been included in awards since the late 1980s and it is timely that there be a review to ensure that the criteria for selecting and reviewing funds is appropriate,” she said.
