Will The Removal Of Quality Filters Benefit Employers?

There have been calls for a rethink after suggestions the government may lift the current quality filters in place on super fund selection for employers, a move proposed by the Productivity Commission.

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.

Compare Super Funds with CANSTAR

Sponsored products displayed are paid advertisements and Canstar receives a fee for referring you to the advertiser.  Past performance is not necessarily a guide to future performance; unit prices may fall as well as rise. Performance information shown is for the historical periods up to 30/06/2016 and investment options noted in the product information. Performance figures shown reflect net investment performance, i.e. net of investment tax, investment management fees and the maximum applicable ongoing management fees and membership fees. Performance information is provided by Rainmaker Information Pty Ltd ABN 86 095 610 996 AFSL 461816 (www.rainmaker.com.au) which provides general information on superannuation. Any advice on this page is general and has not taken into account your objectives, financial situation or needs and is not a recommendation for your particular circumstances. Consider whether this advice is right for you. Consider the product disclosure statement before making a purchase decision. You may need financial advice from a qualified adviser.

Share this article

Enjoyed reading this article?

Sign up to receive more news like this straight to your inbox

By subscribing you agree to the Canstar Privacy Policy.

Thanks for signing up!

Good things are coming your way.