The report, prepared for the FSC by Deloitte, suggests that competition reforms could save MySuper members $292 million in fees each year.
Deloitte’s report is the latest contribution to the fierce debate being waged between industry funds and retail funds about the selection of default superannuation funds.
The current system, under which default funds are included in modern awards through a process overseen by the Fair Work Commission, is currently the subject of an inquiry by the Productivity Commission.
The existing system makes it difficult for retail funds to be included on modern awards.
The industry fund sector has lobbied for the status quo to be retained on the basis that not-for-profit funds consistently outperform their retail counterparts.
But the Deloitte report, released publicly this morning, found that competition “could reduce fees paid by Australian consumers by $292 million each year, across
the 14 million MySuper accounts in existence”, according to a statement by the FSC.
“This equates to a 13 per cent decrease in total administration fees in the MySuper regime,” said the lobby group.
“[Deloitte’s] analysis shows that consumers may be worse off as a result of being defaulted under a modern award or enterprise agreement into a subscale, high cost MySuper product.
“For employees employed under modern awards, the available default superannuation products are limited to those selected by the Fair Work Commission. In 13 per cent of such awards, the employer is provided with no choice of the default fund it may offer its employees.
“[Deloitte] concludes that the current default superannuation regime for award employees does not adequately promote competition at a level that meets with community expectations.”
The report concluded that employers should have greater scope to choose their own default funds, and employees under enterprise agreements should be able to choose their own default super funds.
