Remove vested interests from MySuper

From
Douglas Latto

Douglas Latto

Assertions made by The Royal Commission into Trade Union Governance and Corruption, suggesting that industry funds are paying substantial sums to the unions with which they are associated, come as no surprise to the Corporate Super Specialists Alliance (CSSA).

“The union’s negotiating and bargaining agreements would obviously be drawn to promote the industry fund to which they are related,” CSSA CEO Douglas Latto said. “Therefore, we believe the potential for conflict always existed.”

Mr Latto said any conflict of interest, perceived or otherwise, in the areas of enterprise bargaining and the selection of default funds should be examined and removed. “The industry funds movement has been very vocal about removing conflicts of interest from the financial planning industry. It is now time for them to apply the same standards within.”

In the interests of an open market, the CSSA is therefore calling for the decoupling of default superannuation funds from the industrial relations system.

“If the Fair Work Commission is allowed to select a limited number of default funds in modern awards, then hundreds of thousands of employers will be forced to change the default funds they have already chosen for their staff,” Mr Latto said. “This will create a considerable time impost on employers and will likely also result in more employees having duplicate accounts and potentially higher fees – that is, fees associated with the old account and then fees associated with the newly created account. This is a no win situation for employers and employees.”

Mr Latto said employers often negotiate special discounts or special conditions on behalf of their staff and often subsidise fees or pay insurance premiums for their employees. “Some MySuper funds do not allow this structuring to occur and do not recognise the employer in the superannuation relationship at all,” Mr Latto said. “Forcing employees into an inferior fund just because it is nominated in an award does not make sense.”

The obvious solution, according to Mr Latto, is to allow any MySuper fund to be a default fund. “The CSSA has always stood for choice for both the employee and the employer. The only way to bring down costs, improve efficiencies and introduce large-scale innovation is to have an open market. It’s time to break the nexus between unions and superannuation and allow any MySuper fund to be a default fund. Let Australians choose from an open market and remove the vested interests once and for all.”

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