Is the Government favouring bank-owned funds?

Industry super funds have attacked proposals that may favour bank-owned funds.

helan rowell

The Australian Prudential Regulation Authority (APRA) has outlined a range of tough proposals to reduce wasteful spending by super funds and lift governance of the sector.

The proposals would force boards to prove that any money spent would have a clear benefit for members.

APRA’s proposals would also make it tougher for funds to offer life insurance inside super funds and force them to undertake better business planning.

These super reforms have been criticised by industry funds which, in a submission to Treasury, claim that the overhaul ignored the “long-term systemic underperformance of the retail sector”. In other words, bank-owned super funds would not be subject to the new rules.

According to the submission obtained by The Australian: “On face value, the high-level objectives of the bill seem quite reasonable, but regrettably this reform package requires significant amendment to deliver on its potential to improve member outcomes, accountability and transparency.

“The reform package would increase the regulatory burden on industry and other not-for-profit super funds, yet allow bank-owned and other retail funds to resist scrutiny and reform.

“[It] is an example of both the Government’s inability to impose real reform on the big banks, and its determination to shoulder industry and other not-for-profit funds out of their way.

“It is unfathomable why the reform package has disregard for improving member outcomes in the poorest performing parts of the industry administered by bank-owned super funds, while imposing further scrutiny largely on not-for profit funds.

“Members are entitled to expect their super savings are being managed transparently and in their best interests regardless of whether they are a MySuper or Choice member.”

Super funds have until the middle of September to give feedback about the proposed changes.

Are you happy with your super fund? Do you feel it acts in your best interests? Are you with an industry or retail fund?



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    16th Aug 2017
    I'm with an industry fund and it's great. And industry funds are outperforming bank funds. Hands down. Don't favour one section of the industry, banks, over another. Banks have not been doing the best for the customers, whilst posting obscene profits, so what makes anyone think they can be trusted to handle super any differently?
    Old Geezer
    16th Aug 2017
    How is it great? Most are not preforming very well compared to a lot of SMSFs.
    16th Aug 2017
    Fact Check:
    The ATO now publishes SMSF performance data and the real story is quite startling. Until this year, SMSFs had consistently outperformed the large fund sector over the cumulative timeframe (past 8-year period), but the large fund sector (corporate, industry and retail funds) have outperformed SMSFs in six years out of nine, and performed equally in another year. Over the 9-year period to 30 June 2015 however, the large fund sector outperformed SMSFs, just!
    16th Aug 2017
    My Industry Fund offers a Member Direct Option at a much lower cost than an SMF.
    I have comfortably out preformed the best of the funds since it was offered. Members need education on financial literacy.
    Old Geezer
    16th Aug 2017
    Fact Check.

    I'd be very disappointed if my SMSF fund only got the published returns of the large sector funds.

    My SMSF costs approx 0.16% to run etc which is far cheaper than any industry fund.
    17th Aug 2017
    Wasn't referring to YOUR SMFS OG, just your cherry picking of data.
    I was referring to your wrong claim that Most are not preforming very well compared to a lot of SMSFs.
    Straight from the ATO:
    SMSFs outperformed large super funds for the three financial years ended 30 June 2007, 30 June 2008, and 30 June 2009, but large super funds performed better for the 6 years ended 30 June 2010 through to 30 June 2015, according to the ATO. Note that for the financial year ended 30 June 2012, both SMSFs and large funds delivered a return of 0.4%, until the ATO recently adjusted the annual return for SMSFs for that year to 0.3%.
    16th Aug 2017
    Hands of our Industry Funds the Government has stuffed up super all ready to the point where people are cutting back on it. I have tried a bank run super fund and was ripped off big time.Any more changes I will pull out of super and go to C.Link where I would be better off.
    16th Aug 2017
    Not sure about APRA and I do not trust the organisation since it put bail in laws into its documents without the permission of Australians.
    I find it laughable that we are, apparently, getting more protections. We need to remember that the current government not too long ago complained about union directors on the Boards of not for profit superannuation funds which were outperforming the retail funds by a country mile. Their solution was to remove union directors and put in (highly paid) business people. So the salaries went up and the return to investors down.
    16th Aug 2017
    Which is when the investors should have started fussing loud and long until it was sorted out. People will be walked all over when they allow this sort of corrupt behaviour without a fight.
    16th Aug 2017
    Mick you are so right there

    16th Aug 2017
    Anything that increases regulation on an industry that is responsible for other people's savings has to be a good thing. Making life insurance an opt in rather than an opt out is a good decision. As I have said here before, because I was in casual employment for a time, I was in a few super funds at the same time, all of them wanting to enrol me into a life insurance scheme. The premiums were exorbitant when compared to insurance companies premiums and I had to actually cross out the option.
    Old Geezer
    16th Aug 2017
    Life insurance should never have been any where near super funds in the first place. Just an excuse to further profit from people's super.
    16th Aug 2017
    Yes OG and as you become more of a risk by aging they lower the payout so it never was a good deal.
    16th Aug 2017
    Dick head. Who has multiple funds?
    16th Aug 2017
    FSC is all for this. Best reason not be for it. Industry fund are far better. Why would you trust the government when they broke their election promises to older Australians after the election on super. Gave all the benefits to their 1% mates.
    17th Aug 2017
    Why would you trust a bank fund after all the recent scandals?

    16th Aug 2017
    There isn't adequate information in this article to respond whether the APRA move is a good thing or not. There are some sensible comments above from MICK and Old Man, but the overall picture is unclear. In the absence of such clarity, one can say any move by APRA to improve outcomes for Members should be welcomed e.g. remove Insurance as a default, yet the comment " undertake better business planning" could also indicate an attempt to reduce union reps and increase private business-people into the Board.

    On the other hand, a recent news about the CEO of AustralianSuper, an Industry fund, threatening ASX companies that they will not invest in them if they don't increase the quota of females on the Board indicates a nasty private-agenda-based mentality without considering Member's interests - and such actions should be stopped. Of course, all reviews of practices must also cover Retail funds e.g. we should not have some stupid CEO, such as the CEO of Qantas, driven by his own agenda to drive the same-sex marriage agenda (I call it a destruction-of-marriage agenda), making such issues more important than the outcomes for Members.

    16th Aug 2017
    I think its great that this government is plugging all the loopholes that labor failed to do, and make the super regime safer for all Australians
    16th Aug 2017
    Safer, and less profitable. But better for big banks. You have to be joking, Raphael! Or just an LNP troll looking for any excuse to knock Labor? The LNP has been screwing retirees and our most disadvantaged and breaking key election promises since the day it came to power. I don't like Labor either, and I was once a strong LNP supporter, but nothing this LNP has done is commendable - least of all devising yet another way to favour big banks and make the funds workers may prefer less profitable.
    16th Aug 2017
    BTW. I agree there's inadequate information about this move to make a fair judgment, but after assessing the hideously flawed proposal to let retirees sell their homes and put money into super, I would never trust this government to do anything right in implementing super reform.
    ex PS
    21st Aug 2017
    This government will not be happy until it has destroyed the Super system. It wants retirees to be dependent on them so that they can manipulate them more easily.
    They also want people to be unable to retire earlier in order to keep their mates in business supplied with cheap labour.
    No retiree in their right mind would give this government another three or four years to screw them over.

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