Douglas Latto

The Corporate Super Specialist Alliance (CSSA) disputes that making any MySuper fund a default fund will result in unnecessary costs and expensive red tape.

“We actually think the opposite is true,” says CSSA President Douglas Latto. “If any MySuper fund can be a default fund then most employers will not be forced onto the market in search of a new provider; they will elect to stay with their current fund. This means there would be no employer search costs and no red tape.”

Mr Latto says that at the moment some funds are under multiple Awards and each Award has a different default fund requirement. “This means employers may currently be paying to a number of different funds because the Award forces them to have different defaults for different groups of employees,” he says. “If any MySuper fund could be a default fund, employers could consolidate into the preferred fund amongst the funds they are contributing to. This would reduce time and red tape for the employer because they would then only have to choose one fund for their whole company.”

The CSSA also believes that it is not appropriate for the Fair Work Commission to be responsible for selecting default super funds for inclusion in industrial awards.

“With the greatest respect, we do not think the Fair Work Commission has the expertise or experience to do this kind of work. We are giving responsibility for millions of dollars of consumer retirement savings to people who have no expertise in choosing funds,” he says. “CSSA advisers take years to hone their skills, to make their selections and to understand how products work.”

Mr Latto also said that under the new MySuper rules only registered organisations can submit on modern awards and this presents a conflict of interest.

“Registered organisations are bodies like unions and employer groups,” he says. “When these organisations make their submissions they are highly likely to support their own funds. If any MySuper fund could be a default fund, this conflict of interest would cease to exist.”

Allowing any MySuper fund to be a default fund would also see the return of a fair market and a level playing field, he says.

“We utterly reject the concept of a ‘quality filter’ which narrows the universe of default funds down to a mere handful,” he says. “If the marketplace is reduced to just a few funds, people are forced to go into them. This is not only uncompetitive but also completely removes innovation from the marketplace because there is simply be no need to innovate.”

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