May 29, 2018

Government and big banks cop a hiding on super

The Productivity Commission's vision for superannuation is very far from the one the government and the big banks have been hoping for.

Bernard Keane — Politics editor

Bernard Keane

Politics editor

Make no mistake: the Productivity Commission's draft report on default super funding arrangements is a ferocious blow for the government and the retail super sector. Not even Kelly O'Dwyer's pre-emptive -- and pathetic -- attacks on industry funds run verbatim by the Financial Review can distract from it.

The default superannuation issue is complex and has a long history, but it boils down to this: the award system long restricted the capacity of retail superannuation funds to get access to new workers because the awards dictating where employers put new employees' super was dominated by industry funds (and AMP). Labor tried to fix the process via a Fair Work Commission panel but got too cute by half and the panel was knocked off when the retail super funds' lobbying arm, the Financial Services Council, defeated it in court. As it turned out, that was a textbook Pyrrhic victory, because it froze the current settings until the government found a way to open up default funds to the big banks. That was four years ago. The FSC has been screaming for the government to do something ever since.

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