The Australian Government has announced an inquiry into default superannuation funds in modern awards by the Productivity Commission. The Government indicated that the inquiry is expected to commence in early February 2012, after formal receipt by the Commission of the terms of reference.

The purpose of the inquiry is to design transparent and objective criteria for the selection and ongoing assessment of superannuation funds eligible for nomination as default funds in modern awards. In considering these criteria, the terms of reference state that the Commission could have regard to the:

•appropriateness of the investment strategy of the default investment option of the fund in terms of risk and expected return
•medium to long term net-of-costs investment performance of the default investment option
•level of fees incurred by members
•scale of the fund and the level of services provided to fund members
•suitability and cost of insurance provided by the fund
•governance of the fund
•fees incurred and other impacts on members if they cease employment with an employer.