Who’s paying for this?

download (2)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.

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19 Responses to Who’s paying for this?

  1. Chris

    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.

  2. stackja

    Unions/ALP control the Super. It is their Marx-given right to tell the great unwashed what to do.

  3. Crossie

    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.

    Digital airport screens in Qantas business lounges? Hardly where a lot of industry superfund members congregate.

  4. Derp

    Hardly where a lot of industry superfund members congregate.

    But faceless men and politicians regularly trough there.

  5. Diogenes

    they were being charged premiums for insurance that they didn’t know they had.

    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.

  6. 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.

    Finally! I’ve been rambling on, even guest blogging about this scam, here at Catallaxyfiles for years.

    Well done, Mr Abbott and Mr Hockey.

  7. The offending law:

    http://www.austlii.edu.au/au/legis/cth/consol_act/sga1992430/s32c.html

    s 32 (6)

    (6) A contribution to a fund by an employer for the benefit of an employee is also made in compliance with the choice of fund requirements if the contribution, or a part of the contribution, is made under, or in accordance with:

    (a) a pre-reform certified agreement; or

    (b) an AWA; or

    (c) a pre-reform AWA; or

    (d) a collective agreement; or

    (e) an old IR agreement ; or

    (f) an ITEA; or

    (g) a workplace determination; or

    (h) an enterprise agreement; or

    (i) an award mentioned in paragraph 2(2)(a) of Schedule 3 to the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 ; or

    (j) a State reference transitional award or common rule.

    Repeal s 32 (6) of the SGAA – NOW!

  8. Bob in Castlemaine

    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!

    Meanwhile, Mr Bracegirdle continued to raise the issues with TWU delegates and representatives. In August 2013, Mr Bracegirdle was again raising the issue with the TWU. Mr McGiveron, the former WA branch secretary of the TWU, told Mr Bracegirdle ‘to F-off. No-one cares, Paul. Go away.’
    Mr Rick Burton, the current WA branch secretary, was present when this conversation occurred.”

    Good luck with that freedom of choice?

  9. Ez

    The super fund trustees have a sole responsibility to maximize the financial benefits of members

    Are you sure?

    According to Industry Super Australia they concern themselves with:

    Nation Building and Infrastructure
    Many of these investments enable Industry SuperFunds to partner with governments to help meet the needs of communities and generate employment

    Industry SuperFunds rightly view infrastructure investment as a priority in delivering a strong economy and decent living standards. Importantly, a strong safety net of superannuation default funds is fundamental to this task – ensuring a stable inflow of money is available for nation building projects.

    More from Whiteley:

    One option the inquiry’s panel will be considering is how best to use Australia’s superannuation savings to turbo-charge the economy. With superannuation assets predicted to exceed bank financial assets by 2036, super could be a second pillar, alongside the banks, providing a competing source of funding and reducing systemic risk.

    In this way super can be a leading force in moving Australia out of its mining boom into a new infrastructure era.

    [my bold]

    Benefits of members? We’ve got an economy to turbo-charge!

  10. Mmamster

    Judith do you have some stats on industry super fund returns v retail funds that are adjusted to take into account:

    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.

  11. Kingsley

    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?

  12. Jimp51

    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.

  13. Empire

    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.

  14. duncanm

    Here’s your response..

    Dear ,

    Thank you for your inquiry about AustralianSuper’s involvement with The New Daily.

    The funding of AustralianSuper’s interest in The New Daily is as an item in the Fund’s communications and marketing budget, rather than an investment within the Fund’s portfolio.

    The New Daily places a strong emphasis on providing clear, relevant and practical personal finance content. AustralianSuper sees this vehicle as a way of providing members with a source of daily, independent news as well as clear and relevant information on personal finance that will help to build their understanding of personal finance and superannuation issues.

    As a fund with over 2 million members we are always looking for effective ways to engage with our members and encourage them to increase their understanding of super to help them make good decisions about their retirement savings.

    AustralianSuper’s support of The New Daily does not represent any additional cost to members. The Fund’s marketing and communication costs are funded by the $1.50 per week administration fee.

    Yours sincerely,

    Michael Porter
    AustralianSuper Administration

  15. duncanm

    I didn’t like that response.. pressed a little more, and got this..

    Dear Mr Sucker,

    Thank you for your email on 12 November 2013. We appreciate you taking the time to raise your concerns with us regarding The New Daily.

    AustralianSuper’s interest in The New Daily is not part of the Fund’s investment portfolio, therefore the financial success or failure of the business will not affect the investment return that you and other members will receive from AustralianSuper.

    Instead, we regard The New Daily as a member engagement tool and a member service. Accordingly it is paid for from the $1.50 per week member fee. This fee covers all non-investment costs of the Fund including all member services, communication and marketing activities. The fee is amongst the lowest in the industry, was struck in 2009 and will remain at that rate until at least 2014.

    The AustralianSuper Trustee carefully considers all decisions and continuously asks whether any decisions or actions undertaken are in the best interests of members. The Trustee is confident that AustralianSuper’s involvement in The New Daily is consistent with the sole purpose test.

    AustralianSuper provides a range of products and services for its members (e.g. information and advice tools; retirement seminars and events; financial advice services) and believes The New Daily provides another valuable service for members.

    The New Daily and AustralianSuper are acutely conscious of the need for accuracy and balance, and understand that the reputation of the publication cannot afford to be compromised if it is to be successful.

    The New Daily is governed by an Editorial Charter and abides by the principles of the MEAA Code of Ethics in relation to its positions on editorial independence and impartiality.

    As outlined in the Editorial Charter, The New Daily will not carry opinion articles on party political or industrial relations matters. It will also not publish editorials nor have a policy position on issues.

    A key objective of The New Daily is to improve the financial literacy of readers by delivering content that has a focus on personal finance, as well as general news content. We believe that if members engage with this more practical, day to day content about money and personal finance that is relevant to their lives, they will be better disposed to consider information that will help them save for their retirement and a better financial future.

    This focus on financial literacy is explicitly specified in The New Daily’s Editorial Charter.
    As Australia’s largest industry super fund with strong, long-term performance, we believe we have made judicious decisions about how we spend our marketing and advertising dollars in an effort to retain and educate our members.

    We are confident that our decision to support The New Daily is a good, long term decision that will enable us to engage with our members and provide them with a valuable service at the same time.

    The initial response to The New Daily has been largely positive. We are therefore looking forward to continuing to provide this service for our members.

    We hope that we have been able to adequately address your concerns and queries.

    If you have any other questions please do not hesitate to contact us.

    Yours sincerely,

    Michael Porter
    AustralianSuper Administration

  16. duncanm

    I didn’t much like that brushoff, so pushed a little more.

    More of the same guff.. but this in particular:

    The AustralianSuper Trustee carefully considers all decisions and continuously asks whether any decisions or actions undertaken are in the best interests of members. The Trustee is confident that AustralianSuper’s involvement in The New Daily is consistent with the sole purpose test.

    They must have repurposed the ABC complaints handling system

  17. Boambee John

    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.

  18. Ez

    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.

  19. The funding of AustralianSuper’s interest in The New Daily is as an item in the Fund’s communications and marketing budget, rather than an investment within the Fund’s portfolio.

    Hahaha! It is union propaganda masquerading as news!

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