Employers are increasingly concerned at the red tape cost of selecting workplace super funds for their employees from an unranked list of 120 MySuper funds.
The selection process, set to impose a financial and legal burden on employers, is estimated to cost $1.8 billion nationally according to new research, falling most heavily on small businesses.
David Whiteley, Chief Executive of Industry Super Australia (ISA), says that more than eight million Australians don’t choose their own super fund and rely on
their employer to place them in a high performing fund.
“These funds are selected in a merit based process overseen by the Fair Work Commission (FWC).
“We support the FWC process of applying a ‘quality filter’ to short-list the best performing funds for employers.
“The FWC process puts competitive pressure on the super industry to deliver strong investment returns, provides a safety net for employees’ retirement savings and cuts red tape for employers.
“It removes the cost and guesswork for employers and ensures the vast majority of Australians who don’t actively choose their own fund are placed in a high quality, safety net fund,” Mr Whiteley said.
A practice that is being jointly scrutinised by APRA and ASIC, bank owned super funds are lobbying the government to scrap this process in order to bundle business banking services for employers with super arrangements for employees.
“In 2014, the banks attempted to remove consumer protection for people needing financial advice. In 2015, they are attempting to remove consumer protection for more than eight million workers who do not choose their own super fund,” Mr Whiteley said.