It is estimated that 8 in 10 employees do not choose to elect their own super fund, despite the fact that everyone has the right to do so. At present, employers needing to select a superannuation fund for their employees have their choices conveniently narrowed from the 120 MySuper funds available to between two and 15 funds, a process overseen by the Fair Work Ombudsman. Employers worry that, should the quality filters be removed, their red-tape burden will increase dramatically, as they are forced to wade through the total 120 MySuper funds.
ISA Concerned About More Red Tape
Industry Super Australia (ISA), an initiative jointly governed by employers groups and unions, estimates that the potential costs to employers, should the filters be removed, would be $160 million in unnecessary red-tape expenses, due to the necessary due diligence involved in selecting the correct fund.
As is often the case, there are fears the majority of the cost of the changes would be borne by smaller businesses.
ISA chief executive David Whiteley says: “Asking any person to select a superannuation fund from over 100 options is absurd. It places unreasonable search costs on employers.
“Employers have consistently stated that they do not want the responsibility of choosing the default super fund for their employees, nor do they necessarily have the time or expertise.”
Retail Super Funds Advocating For Change
Retail super funds – which are usually owned by banks – have been advocating for the removal of the quality filters. Interestingly, independent ratings agency SuperRatings has found that industry super funds have outperformed retail funds by an average of more than 1.3% in the year to December 31, 2013.