The Federal Government’s superannuation choice scheme takes force on July 1, but still faces significant criticism from superannuation figureheads.

In a letter to Assistant Treasurer Mal Brough, the industry voiced concerns over the implementation of the scheme, specifically default arrangements and the implications for employees who do not exercise their choice rights.

In particular, they have criticised the proposal to permit a contribution to a retirement savings account (RSA), eliminating the obligation to provide minimum death cover, as required by other superannuation products.

Philippa Smith, CEO at the Association of Superannuation Funds of Australia (ASFA), says minimum death cover is “an essential consumer protection” and as such should be regarded as “key criteria” for any default scheme.

She says nothing in the choice regime prevents RSAs being chosen by employees, but exempting a single retirement savings product from the minimum level of death cover requirement creates an “uneven playing field”. Other superannuation product providers may be required to negotiate changes with insurers to meet new standards.

“Meeting the minimum death cover requirements will be a costly and difficult challenge for many other superannuation funds,” Ms Smith said. “The exemption creates an unfair competitive challenge.”