Best-in-show super fund list should be 11: WSSA

Workplace Super Specialists Australia is calling for employer funds to be included in the Productivity Commission's proposed best-in-show list of recommended default superannuation funds.

WSSA chief executive Douglas Latto said if the Productivity Commission's recommendations for the employee assisted model goes ahead, any existing employer funds acting as a default fund should be included as an 11th option.

In May, the Productivity Commission recommended a best-in-show shortlist of default funds for members who are new to the workforce. The list, selected by an expert panel, would empower members to choose their own product, it said.

Members won't be forced to pick from the shortlist, but have access to the full set of MySuper products and "nudged" towards good products.

Every four years, the expert panel would assess the funds are achieving the best outcomes for members.

This includes long-term net returns and fees, investment strategies, intra-fund advice, governance and track record on identifying and meeting member needs.

Latto said: "We propose that the employer fund becomes the default if the employee doesn't choose, because employer funds are not just off-the-rack funds.  A lot of these funds have highly negotiated fees, special insurance arrangements and specialised education facilities," he said.

Limiting the number of funds on the recommended list to 10 would see many good funds struggle to survive, he added.
"Ultimately, we believe the model as proposed would stifle innovation, create barriers for new entrants and many funds would disappear," Latto said.

"While funds might do all kinds of things to get on the list in the first instance, once they are on they will play it safe because they don't want to come off it. There would therefore be no incentive to innovate."

The Productivity Commission iterates in its report that the shortlist should be "short" - no more than 10 products.

It should also be accompanied by simple and comparable metrics on each product's features in a way that captures members' attention, it said.

Read more: Productivity CommissionWorkplace Super Specialists AustraliaDouglas LattoMySuper
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