Default super funds under modern awards

A Super Review roundtable recently considered default superannuation funds under modern awards and how they were going to evolve.

Mike Taylor, managing editor, Super Review: Our last question concerns default funds under modern awards and how funds are going to evolve as a result of that. 

There’s been a lot of talk about this and whether MySuper funds should just automatically be inappropriate. I’ll start with Danielle seeing as she’s raised it already. How problematic is it? 

Danielle Press, chief executive, Equipsuper: Again, I think it depends on your fund’s growth strategy and where your fund is positioned. For some funds it won’t be an issue at all. For funds that have got large Enterprise Bargaining Award (EBA) bases it won’t be an issue at all. 

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For funds that are predominantly one sector it won’t be an issue at all. And obviously it isn’t going to be an issue for AustralianSuper or Sunsuper because they’re already represented in most of the awards. It’s challenging.

To be honest I haven’t got a view on whether or not it’s the right way to go or the wrong way to go, and from our perspective all I know is it creates a challenge for me as a CEO trying to run a fund.  

Mike Taylor, Super Review: Alex? 

Alex Hutchison, chief executive, Energy Industries Super: All I’ve said before is I’ve heard the Fair Work Commission has the skills and resources to carry out these assessments. 

Danielle Press, Equipsuper: That’s another challenge. 

Alex Hutchison, Energy Industries Super: Yes, I can only echo my prior comments on that. I think it’s arguably importing complexity, but we are where we are.  

Tom Garcia, chief executive, Australian Institute of Superannuation Trustees (AIST): If you just said, “anyone who’s in MySuper can be on an award”, then you’re actually putting this gigantic decision process onto employers.

So all of a sudden, if they’re in an award system because you’ve got EBA systems, you’ve got 120 [default options] – but the original number was 300 options – to choose from. Do employers, smaller employers, really want to decide this?  

So I think the idea was to compress it and say, “these are the best ones that we’ve been through”, but as Alex says you want to make sure that the people who are making that decision understand it. That will be the key - who is on the personnel of that panel.  

Mike Taylor, Super Review: Russell? 

Russell Mason, partner, Deloitte: I hear what Tom says. I respect and I would probably prefer that if they’ve got through the hurdle of MySuper, which is pretty onerous and we’ve seen funds go through that – then that should be enough. 

At the end of the day employers can seek advice. I expect the status quo will continue for most, especially in certain industries where there’s a big dominant player in that specific industry. 

Many smaller employers, retail for instance, will stay where they are and stay with the big players. So I suspect there will be little impact, except at the fringes but I think the playing field needs to be opened up.

I think competition is good; so if you’re a good performing industry fund, you’ve got a loyal and strong membership and you’ve worked for that in some ways, then you shouldn’t fear competition. 

I can look at other industries that have been protected since inception – the car industry, for example. Has that made it more efficient? I think the answer would be no. 

So I’m a believer in competition; not unregulated competition, but I think the competition that MySuper allows is a nice balance. So I would think if you’ve got the MySuper licence, perhaps that should be enough – but I hear what Tom says and I can understand where he’s coming from.