The Productivity Commission (PC) may have been scheduled to produce its final report on the Competitiveness and Efficiency of Superannuation in late December but Industry Super Australia (ISA) was working right up until the last moment to urge against workers being defaulted into one superannuation fund for life.
In the last submission registered by the PC in December, ISA strongly warned against the model being preferred by the Commission in its draft report.
“We do not support members being defaulted into one fund for life,” ISA said.
“The risk that disengaged and low-information members will be sold, nudged or defaulted into poor quality funds by their bank, their employer or through inappropriate advice is too great,” it said. “To fulfil the collective social policy purpose of compulsory superannuation, it is appropriate for government to intervene strongly to ensure members are protected from such risks.”
The ISA submission said the organisation had previously explained how this could be achieved in the context of a strengthened industrial safety net.
“If rolling prior accounts into current accounts creates a problem for total and permanent disability (TPD) purposes, it is not a problem unique to an industrially-based system of auto-consolidation. It will arise in any circumstance where a prior account is rolled into a new one, perhaps as a result of pending legislation for inactive accounts, or perhaps in response to individual choice prompted by a “best in show” shortlist or marketing from a bank,” the ISA submission said.