If implemented, the recommendation would also hinder industry-specific funds from creating insurance protection relevant to the needs of a workforce.
TWU National Secretary, Michael Kaine, said the Productivity Commission recommendations overlooked the critical importance of workplace bargaining to Australia’s retirement savings system.
“Handing responsibility for superannuation to 10 megafunds overseen by a government-appointed panel is a recipe for disaster,” Mr Kaine said.
“The secret to Australian superannuation’s success is its grounding in the industrial bargaining system. This has been a highly successful partnership between unions and employers, underpinned by mutual regard for the best interests of members.
“Anyone outside the Productivity Commission who lives in the real world knows the link between wage bargaining and superannuation is the only way to increase superannuation contributions above the legal minimum. Indeed, many TWU members have negotiated enterprise agreements which include contributions above well 9.5 per cent for precisely this reason.
“As the Royal Commission focus on bank-owned retail funds has shown, problems arise when unions and employer representative are not involved in scrutinising the choice of a superannuation fund.
“Indeed, the Productivity Commission itself finds that 77 per cent of five million underperforming super accounts are in retail funds.
“Creating 10 megafunds would also take the ‘industry’ out of industry funds. TWUSUPER, for example, offers tailored disability and death insurance because many of its members work in the nation’s most dangerous industry – trucking.
“This is provided free of conflict and purchased at scale, making it affordable and relevant. These considerations would be lost under a megafund.
“Auto-consolidation systems can deal with the problem of small balances being eroded by fees. But using that problem as an excuse for the wholesale dismantling of one of the world’s best retirement savings systems makes no sense at all.”