The best-in-show default superannuation fund shortlist the Productivity Commission wants to launch before June 2021 has divided industry opinion.
The Australian Institute of Superannuation Trustees chief executive Eva Scheerlinck said the Commission's proposal for a top 10 default list is a "blunt mechanism that will be needlessly disruptive and fails to address the more serious problem of underperformance in the wider super system."
"According to the Commission, a quarter of default funds underperform but this proposal would deny 90% of funds default status."
Scheerlinck foresees it will remove many high-quality funds from the default system and may disadvantage members in these funds.
"Meanwhile, millions of Australians will be left to languish in poorly-performing bank and insurance owned funds that are outside the default system."
The Commission said the shortlist shouldn't prevent members choosing any other fund - this includes an SMSF. Neither should enterprise and workplace agreements restrict members' choice, it said.
"Any member who does not have an existing account and who fails to make a choice of fund within 60 days should be defaulted to one of the products on the shortlist, selected via sequential allocation," it recommended.
BT general manager of superannuation Melinda Howes sees merit in having a shortlist.
The best-in-show proposal and the idea of defaulting once over the working life of members and for new entrants to the workforce is something BT supports, she said.
At the time the draft report was released, BTFG chief executive Brad Cooper backed the idea of establishing an expert panel to select the best funds to help guide consumer choice.
The Commission wants a Federal Government-backed expert panel to oversee the list.
It sees the panel selecting from products submitted that meet a clear set of criteria that delivers the best outcomes for members over the long term - but moreover perform strongly.
"The panel should have flexibility to select up to 10 products, with the exact number at the discretion of the panel based on the merit of each product and what is most tractable for members, while maintaining a strong competitive dynamic between funds for inclusion on the shortlist," it said.