If being forced to have a third of trustees be classified as independent (including the chair) – note that Cbus calls John Dawkins an independent director (Cats: stop that laughing) – is not bad enough, the mean federal government now wants to remove the monopoly position of union industry super funds in respect of default funds specified in Modern Awards.
Chief shrill lobbyist, David Whitely (pictured), gives the game away by declaring that 80 per cent of workers don’t make a choice of super fund (this figure is completely rubbery; virtually all workers on union enterprise agreements are given no choice at all, eg. universities). But let’s run with that figure. It makes the exclusive positioning of industry super funds listed in Modern Awards (there are hardly any others) the key to the massive automatic flow of funds to these favoured funds.
Of course, the solution is simple: remove superannuation from the industrial relations regulation (it should never have been there) and simply provide employers with a list of MySuper funds from which to choose. In the meantime, the government might want to run a campaign encouraging workers actually to make the choice of super fund themselves.
But the industry super funds are not having a bar of it. They will quote their higher returns (ignore the duds and ignore the dubious valuations put on direct investments in which industry funds can invest because they have few liquidity constraints because of their monopoly position in respect of default funds) as a defence for their ongoing monopoly position.
And now they are using industry superannuation members’ money (Industry Super Australia has no money of its own) to campaign for the retention of the default fund monopoly.
Is this appropriate? The super fund trustees have a sole responsibility to maximize the financial benefits of members; it is neither here nor there for existing members whether the default fund arrangement continues.
Now no doubt there will be some fudging of the information – the money is coming from Administration Fees levied on super funds members not from members’ investment accounts.
I just don’t think this is good enough. The use of Administration Fees (used to fund the dud newspaper venture, the unloved and unread New Daily – remember that fiasco) should still be used for purposes to benefit existing members, not to defend the empires of industry super funds.
So APRA – step up to the plate. You need to kill off this inappropriate spending by the industry super funds before it commences.
(I can easily take this stand because David Whitely’s pathetic defence of industry super fund, NUW’s LUCRF’s contribution to IR21 to fund Bill Shorten’s campaign against Anthony Albanese to be Labor leader is that APRA will take a look at it if there is anything untoward. Oh please. Some teenagers in APRA wrote a report that governance in superannuation was pretty OK back in 2012. Oh please again.)
Here is the story:
Industry superannuation funds are launching an aggressive advertising campaign against what they fear is an imminent move by the Abbott government to make it more difficult for them to be the “default” for employees who do not nominate a fund for their superannuation.
These contributions are estimated to be worth between $6bn and $9bn a year and because historically the “default” fund was set as part of industrial negotiations, the union funds dominated.
The recent financial services inquiry recommended a continuation of the most recent system – where a “default” fund is decided through the Fair Work Commission – but the big banks have been lobbying for employers to have free choice.
And in a recent speech, the assistant treasurer, Josh Frydenberg, said he wanted to unleash the “strongest possible competitive forces for the benefit of every superannuation fund member”.
Industry Super cites research showing that over the last decade industry funds have delivered higher returns to their members and accuse the big banks of “embarking on a major government lobbying campaign to design superannuation regulations to suit their business model.”
The chief executive of Industry Super, David Whiteley, said the banks wanted to be able to “bundle” their business banking services and the super arrangements for a business’ employees – an offer he said would benefit the business but not the workers.
The Financial Services Council – which represents the bank-backed retail funds – said more competition over default funds would bring down fees.
“The banks seem to stop at nothing to get their hands on Australians’ super savings,” Whiteley said.
“The retail and bank-owned super sector has failed to deliver competitive investment returns and are seeking to create an unlevel playing field that suits their business model potentially at the expense of Australians’ super savings”.
The government’s response to the financial services inquiry headed by David Murray is expected within weeks.
The Industry Super ad campaign will run through October and include billboards, digital airport screens in Qantas business lounges, online videos, social media and TV sponsorships in the AFL and Sky News.
Bloody shonks.
My kids moved on from teenage part time jobs and a bit later got letters saying their super balances had been reduced to zero because they were being charged premiums for insurance that they didn’t know they had.
Unions/ALP control the Super. It is their Marx-given right to tell the great unwashed what to do.
Digital airport screens in Qantas business lounges? Hardly where a lot of industry superfund members congregate.
But faceless men and politicians regularly trough there.
Brought to you by Dullard & the Goose !
Mrs D has no fund choice & is in an industry fund which is actually underperforming her old fund (not a lot but every bit helps, and has lower fees) – using the really easy mygov functionality(ie log on – click 2 links & a button) she is rolling over the balance every 6 months & keeping as low a balance in the industry fund as she can manage – her employer is getting annoyed with her as the rollover closes her account & the employer has to create a new account , change membership number & the industry fund has to send out a letter every time and every she is signed up she gets the !^[email protected][email protected]$~! insurance (at 56 yo the premiums are not cheap) and rings to cancel.
A narky HR lady rang Mrs D to get to stop doing this, and leave at least $1 in the fund to overcome the membership # problem – Mrs D said if you let me put my money where I want it I wouldn’t do it. – Can’t said HR drone, the EBA says we have to do this.
Several of her collegues are now doing the same thing & HR is getting right royally p****d off & has got the union involved to try & convince them that the industry fund is better and the organiser was told in no uncertain terms to f*** off -this is a business that runs several other smaller businesses and none of the employees of that smaller business that Mrs D works in are union members.
Finally! I’ve been rambling on, even guest blogging about this scam, here at Catallaxyfiles for years.
Well done, Mr Abbott and Mr Hockey.
The offending law:
http://www.austlii.edu.au/au/legis/cth/consol_act/sga1992430/s32c.html
s 32 (6)
Repeal s 32 (6) of the SGAA – NOW!
Choice of super fund, what’s that?
Paul Bracegirdle didn’t fair too well when he tried to choose his preferred super fund in preference to TWUsuper when he was working for Toll. The TWU indeed took a very dim view of that idea!
Good luck with that freedom of choice?
Are you sure?
According to Industry Super Australia they concern themselves with:
More from Whiteley:
[my bold]
Benefits of members? We’ve got an economy to turbo-charge!
Judith do you have some stats on industry super fund returns v retail funds that are adjusted to take into account:
Does anyone know just how deep industry funds have gotten into infrastructure? Given its lack of liquidity one wonders if they HAVE to maintain this steady flow of funds into their coffers from default fund arrangements in order to pay out pensions?
This became very evident when I moved to QLD and took up some ‘temp’ employment between arriving and now. Sun Super is the super of ‘choice’ up here. But like most systems it can be worked. I transferred my super from southern funds up here, amalgamated some funds from QLD Govt funds (incident my much more lucrative the union super funds) and now enjoy far less restrictions on accessing my super savings. By the time I retire (maybe, having way to much fun self employed) Labor will be back in power thanks to Melbourne and Sydney voters and I can look forward to a pension.
The Organised Slime have no clue what fiduciary duty means, but it’s clear this duty is breached 24/7.
What we have folks is an enforcement problem and that’s why TURC is causing palpitations for the slime.
Here’s your response..
I didn’t like that response.. pressed a little more, and got this..
I didn’t much like that brushoff, so pushed a little more.
More of the same guff.. but this in particular:
They must have repurposed the ABC complaints handling system
note that Cbus calls John Dawkins an independent director (Cats: stop that laughing)
Time for some of these appointments to get the Dyson Heydon treatment, as follows:
“While we are fully confident that Mr Dawkins operates ion a totally independent and transparent fashion, we note that he was for many years a Labor member of Parliament, indeed, he was a minister in Labor governments.
As stated by representatives for the union movement to the TURC, the unions and Labor are inextricably linked. Therefore, while (to repeat), we are fully confident that Mr Dawkins operates in a totally independent and transparent fashion, there could be a perception to the reasonable outside observer that he might retain some residual links with the Labor Party, and hence the unions, that might lead that reasonable outside observer to gain the perception that he is not fully independent, and so has a perceived bias or conflict of interest. In the interests of the fund, he should resign immediately.”
Apply the same to Barrie Cassidy and his many media mates with links to the Labor Party, like Combet’s current squeeze, and to the many Labor appointments to various “independent” commissions such as the HRC.
Give them the full Alinsky, make them live up to the standards they demand of others.
Kingsley
As Dot points out above, s 32 (6) of the SGAA effectively locks in the income stream of many ISF’s, as workers of certain employers are denied choice of fund.
Some infrastructure investments by ISF’s include:
* Some funds (like Hesta) invest in infrastructure through fund manager: IFM Investors.
* Cbus claims to have $2.82B invested in various infrastructure holdings.
* UniSuper was a major investor in AquaSure, better known as the Victorian Desalination Plant.
Hahaha! It is union propaganda masquerading as news!