BILL Shorten, the Minister for Financial Services and Superannuation, has made good on his promise to the retail superannuation sector to have the Productivity Commission make a review of default superannuation funds in industrial awards.
Yesterday, Mr Shorten and Assistant Treasurer Mark Arbib issued the terms of reference for the review.
The retail superannuation sector, dominated by the banks and insurers, wants to be able to have its funds compete with not-for-profit funds as the default providers in awards.
Default funds receive the compulsory superannuation contributions from employees who do not choose a fund. In workplaces covered by industrial awards, the default funds are almost exclusively not-for-profit funds.
Usually, the industry fund will have equal representation on its board from the union that covers the employees and from the large employers in the industry. The review will likely begin next month and run for up to eight months.
"The government believes default funds should continue to be included in modern awards, but there should also be a transparent set of criteria that such funds can be assessed against," Mr Shorten said.
John Brogden, the chief executive of the Financial Services Council, representing the retail sector, said the process for selecting super funds in awards was a "closed shop, anti-competitive and failed to protect consumers".
The only way default funds can be added to an award is through the recommendation and agreement of employer groups and unions. Mr Brodgen said that was "riddled with conflicts of interest".