Speaking at a video address at the Workplace Super Specialists Australia Conference, the Assistant Treasurer, Josh Frydenberg, said the low level of member engagement needs to be mitigated through better financial literacy and other initiatives.
“The Productivity Commission, in its 2012 inquiry into default superannuation funds in modern awards, noted that about 70 per cent of employees are members of the default fund selected by their employer, and of those who default into their employer’s default fund, roughly 80 per cent are in the default investment option,” he said.
“These statistics highlight that we need to do more – as government and as industry.
"I’m passionate about increasing levels of financial literacy across the community and am interested in partnering with industry on initiatives that can make a difference," Mr Frydenberg said.
Mr Frydenberg said the industry and government should not be content with the current levels of disengagement.
“It is here that I believe the [industry] has a unique opportunity to play a role to engage directly with employees at a workplace level, in a very practical way,” he said.
This, he said, may require further regulatory change in this area, such as those relating to the effects of the Future of Financial Advice laws.
Mr Frydenberg also pointed out that the government is committed to increasing competition in the default superannuation market.
"I firmly believe in the benefits of competition and its power to put downward pressure on fees and increase the quality of superannuation products," he said.
"Opening the superannuation market to competition will require consideration of an alternative to the current, poorly conceived Fair Work Commission process for the selection of default funds in modern awards."
Mr Frydenberg noted that the government wants to ensure that the regulatory framework relating to default super is "robust" and "appropriate" to support moving to a more competitive market.
"Ultimately, we want to put in place a framework that will generate the strongest possible competitive forces for the benefit of every superannuation fund member," he said.
