Don’t you just love the employer associations? … NOT. They seem to be on board with the unions’ campaign of resistance to any change to the governance rules (50/50 split between member/union and employer representatives on the board of trustees) of industry superannuation funds.
David Whitely, head of the industry superannuation fund association, defends the current racket on the basis that industry superannuation funds have outperformed other funds.
Now truly financially literate Cats, doesn’t this result sound strange? Would we not expect the returns to be pretty much the same for an equivalent asset allocation in all types of funds? After all, virtually all the funds use the same pool of funds managers.
Is there something going on? For example, some of the industry superannuation funds are seriously overweight direct investments the valuations of which are both a bit shonky and seriously lagged. Is the effect to create an illusion of high returns – eg. MTAA Super? And is the supposed gap between the returns of industry super funds and other funds weighted by the number of members?
I am also pleased to report that the government and APRA are looking into possibly inappropriate spending by industry superannuation funds; in particular, the use of the admin charge for sponsorships and marketing.
It could be pointed out that listed companies use shareholders’ money for similar purposes but note that shareholders have the scope to turf out the board if their decisions look unrelated to promoting the highest shareholder returns; this is not the case with the industry superannuation funds. Members are unable to turf out the trustees.
Another difference is that companies will use sponsorship and marketing to secure more customers. It is not clear that it is in the interests of an existing member of an industry superannuation fund to have their funds use to recruit new members.
The fact that the industry superannuation funds are on notice is a good thing.
The federal government is planning to keep a ‘close eye’ on the marketing budgets of Australian superannuation funds amid concerns some are using member funds improperly, according to The Australian Financial Review.
Assistant treasurer Arthur Sinodinos said the government was monitoring the situation with the Australian Prudential Regulation Authority to do the heavy lifting.
“We’re keeping a close eye on it but at this stage, it’s mainly through APRA,” he told the AFR.
“We’re making sure there’s transparency around how members’ funds are invested.”
One example highlighted by Mr Sinodinos of the need to be accountable to fund members was the $6 million investment in a new online newspaper – The New Daily – by Australian Super, Cbus and Industry Super Holdings last year.
Another point: Can anyone explain why industry superannuation fund, HOSTPLUS, is a Premium Partner of the Melbourne Storm Rugby League Club? What benefit to the members secure from this spend of members’ funds?