“A workplace default framework is a necessary counterweight to finance sector sales tactics,” he said.
The commission’s plan for overhauling the $600 billion default super system is the creation of a shortlist of 10 “best in show” funds.
Workforce entrants who fail to nominate a fund would be directed to one of the 10 so-called defaults, which would be selected by an expert panel.
“This new approach will support member engagement by nudging members towards good products without forcing them to pick one,” the commission says.
“Members will retain the option to choose from the wider set of MySuper and choice products, or establish their own self-managed super fund.”
Super industry lobby groups have criticised the idea, claiming it would result in the emergence of 10 mega funds because millions would abandon their own funds in favour of the government-endorsed shortlist.
Former Willis Towers Watson Australasia chief executive Andrew Boal, who chairs the retirement strategy group for the Actuaries Institute , agreed there might be unintended consequences.
“One possible outcome might be that some funds will experience negative cash flow as a result, forcing them to sell some of their illiquid investments and potentially harming their ability to perform well into the future,” he said.
While “best in show” is unpopular, there is widespread support for the idea that people would only ever be tipped into a default fund once.
“We agree with the PC’s recommendation that a consumer’s first default should be their last default,” Mr Hartley said.
“For this to work in consumers’ best interests, the current rules for allocating default accounts must be changed to protect individuals from poor products and to ensure system competitiveness, efficiency and fairness.”
from Just News Viral http://bit.ly/2TEYnIb
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