13th Sep 2017

Why is the Government so determined to break industry super?

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Govt attacks industry super again
Ben Hocking

The Government reintroduced legislation into Parliament yesterday aimed at changing the make-up of superannuation fund boards.

The proposal mandates the make-up of superannuation fund boards to include one-third independent directors and an independent chair.

The Government last tried to pass the legislation through Parliament in 2015, but it failed to pass through the Senate, with the legislation failing to gather support from the Labor Party or the cross benches.

The legislation is being strongly opposed by industry super funds, which favour the equal-representation model of appointing directors from employer and union groups.



The industry funds rightly argue that the current system serves them well, consistently out-performing bank funds by a significant margin.

In fact, last month the Australian Prudential Regulation Authority (APRA) released figures showing that in the past financial year, industry funds delivered an average return of 10.7 per cent, compared to 7.8 per cent for super funds run by financial institutions, a gap in performance of 2.9 per cent.

The most galling thing about the proposals is they come at a time when the poor governance, culture and conduct within banks and their wealth-management arms are at an all-time low.

Industry Super Chief Executive David Whiteley said: “Industry super funds are deliberately different and have been immune to the scandals that continue to cause significant consumer loss and hardship.

"Member-first governance and culture is the reason industry super funds outperform bank-owned super funds.”

"The success of the trustee governance model is evident in the outperformance of the industry super sector over the bank-owned super sector,” said Mr Whiteley.

If the Government wants to reform superannuation it should look at the parts that are not working.

Earlier this week, the Nick Xenophon Team (NXT) introduced legislation to try and fix the unpaid superannuation problem that has cost Australians $17.1 billion.

Addressing the gender gap in superannuation is infinitely more important than trying to fix a system that isn’t broken.

Speaking at the launch of the new Women in Super (WIS) Make Super Fair campaign, National Chair Cate Wood said the crisis in retirement outcomes for women warranted an urgent rethink of how the superannuation system can better deliver for half of the population.

“When around 40 per cent of older single retired women live in poverty, we need to stop and say enough is enough,” Ms Wood said.

“We must do better than a system that sees women retiring with 47 per cent less than men. This is a crisis and unless we act now we will be leaving a tragic legacy for younger women. It is not fair or reasonable to simply tell women to fix the problem themselves. We need to get the basics right.”

Some of the WIS suggestions include paying super on paid parental leave, an immediate increase of super contributions to 12 per cent and an annual $1000 super contribution to provide a fair share of support for low-income earners, up to a super balance of $100,000.

All of these suggestions seem significantly more urgent than changing the way industry super funds are run, which has generally worked in favour of members.

What do you think? Why is the Government so determined to break a winning formula with industry super funds?

 

Related articles:
Is this the fix for unpaid super?
How many times is your super taxed?
Industry super funds still the best





COMMENTS

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4b2
14th Sep 2017
11:09am
The government should focus on the unpaid contributions, rather than trying to prop up their financial sector contributors. They should also return to the annual increases to bring the funds up to a level to support the retirement sector in the future without delving into their precious Future Fund which I believe shoud benifit all Australians.
Mez
21st Sep 2017
12:39pm
EXACTLY!
Will also have less older women becoming homeless if there were no 47% difference in super payout and if all women were paid equal wages instead of 25% less!
maelcolium
14th Sep 2017
11:12am
This LNP Government has a hard on about anything to do with Unions.
As far as they are concerned, Unions are the scourge of the earth and Corporates are the saviours in the sky. Industry funds were originally controlled by the Unions, but this has been changed to a more representative mix through legislation. Nonetheless, they continue to outperform private funds and this sticks in the craw of the LNP, so like the hollowing out of Workers' Unions, this Government will rip Industry Funds apart at the behest of the loony right wing. This is not about fairness or equity, but is the mean spirited antisocial ideology of the pyschopaths currently running this once fine country.
Rae
14th Sep 2017
1:24pm
Yes I agree. I believe the attack on part pensions was purely ideological to punish those unionists on defined benefits. Pure hatred of anything union.
MICK
14th Sep 2017
3:58pm
There's an old saying: 'If it ain't broke don't fix it'.

This is about Industry Funds outcompeting Retail Funds and a lucrative cash pool profession investment managers can bleed out of the income stream.

Once again THIS GOVERNMENT is after everything union and the rewarding of the big end of town. Never a mention about the hidden large scale corruption/collusion between the current government and big business which contributes to coalition election coffers. That is the stuff which long jail sentences should be built around but is never explored by our right wing media.
LEAVE INDUSTRY FUNDS ALONE UNLESS THEY ARE PERFORMING POORLY. They aren't!
rglarking
14th Sep 2017
11:18am
Union membership is now around 15% of the working population so why do Unions have mandated seats on the Boards of Industry Super funds?
Why do Unions get payments from Super Funds whose investments are supposed to be for the benefit of the members?
Industry Super Funds should outperform commercial funds as all their profits should be returned to members (not paid to Unions) and they do not have to make a profit for shareholders.
Eddy
14th Sep 2017
12:13pm
Actually rglarking the % of working population in unions is significantly more than 15%. True union membership is declining, one of the reasons is that unions have been too successful for their own good, and the fact that non-unionised members of an employing organisation benefit from the unions efforts in areas such as enterprise bargaining, health and safety, maternity leave, equal pay, job protection (ie unlawful dismissal) etc. A sad fact is that many younger people of today, mine included, do not seem to appreciate that the generous working conditions they enjoy was fought for by their predecessors in unions. Sure there are criminal elements within some unions but look at the business world for the really highly successful criminals, the recent revelations into retirement villages is a classic example and lets not forget the banks, do I need say more. Nearly all the so called industry super funds were started by unions to ensure that their members were given every chance to accumulate savings for their retirement without paying onerous fees. Industry super funds are not-for-profit. Apart from legitimate expenses the board members receive no remuneration from industry funds, that includes both union and non-union members. The continual difference in annual performance attests to this. Many industry super funds invest inn areas of benefit to their members, for instance CBUS, an industry super fund started by the construction unions, invests heavily in construction of office and apartment buildings to provide jobs within their sector and provide good returns for their members.
Last point, no union receives any funds from any industry super fund, it would be contrary to the funds charters, easily detected by APRA and quickly exposed by the non-union members of the boards.
Tom Tank
14th Sep 2017
12:25pm
Spot on Eddy. The board on Industry funds have employer reps as well as union reps. The LNP are jumping at the behest of the private funds simply because industry funds are so successful.
Sundays
14th Sep 2017
1:07pm
Well said Eddy. This proposal by the Government will not benefit members of Industry funds
Tib
14th Sep 2017
10:49pm
Tom I agree with you. The government would like nothing better than to destroy the industry funds. So they can look after the banking super industry. The banks must hate losing all that business to industry funds.
rglarking
18th Sep 2017
11:25am
Eddy, the ABS as reported in both the Australian and SMH ( see http://www.smh.com.au/national/trade-union-membership-hits-record-low-20151027-gkjlpu.html) says the overall union membership has dropped to around 15% - and that was 2 years ago! What evidence do you have that the ABS has got it wrong?
Retired Knowall
19th Sep 2017
8:09am
Fact Check Eddy.
Last point, no union receives any funds from any industry super fund, it would be contrary to the funds charters, easily detected by APRA and quickly exposed by the non-union members of the boards.
Really, check this out.

http://www.dailytelegraph.com.au/news/nsw/industry-super-funds-pay-unions-more-than-50m-over-10-years/news-story/8f2e31cd227b260e5c316f55b1157aa2
ex PS
19th Sep 2017
11:21am
Retired Knowall, I really do miss the days when Newspapers could be used to quote facts, unfortunately, most newspapers these days quote unchecked or heavily edited stories that reflect the political leanings of their owners.
So it may be an interesting story, and you may wish to believe it, but most intelligent people these days would not accept a news story as a fact check.
I have been in a position of Union Council for one of the biggest and best run Super funds in the state and I can tell you first hand that donating funds to any person or organisation is virtually impossible, everything goes through a board that is comprised of representatives from all areas of the organisation, you could not possibly show bias without being exposed and kicked off the board.
Ahjay
14th Sep 2017
11:33am
Why do they want to change? Industry funds don't make political donations . Financial Institutions do .
Solution? Outlaw all political donations.
floss
14th Sep 2017
11:55am
It is almost class war and power.Industry funds do not make donations to any unions just read you annual statement rglarking and get your facts right .
johnp
14th Sep 2017
12:34pm
the retail and private fund managers have the govt in their pocket basically plus all their lobbying and influence there
Not a Bludger
14th Sep 2017
12:34pm
The answer is obvious - it is to get thug union bosses off superannuation fund boards, stop payments to themselves of a motza in fees and keep them well away from members' funds and influence thereon.
johnp
14th Sep 2017
12:57pm
If that is going on then I agree with your comments - however why do industry fund members generally receive much higher performance $$ than such as the retail funds ??
Not a Bludger
14th Sep 2017
5:24pm
Do they, for sure and certain?

I think that comparison of fund returns is a complex analysis if an accurate, like to like measure is to be made.

Unlike some newspaper reports which are certainly not truly like for like - and written mainly by leftie reporters.
Kaz
16th Sep 2017
4:22pm
For goodness sake NAB. Look at the evidence and for once say good on you guys for your success. Mind showing us how to do it? This us and them attitude no matter what is as frustrating as it is unfair and an attempt to stir up division. We're all in this together and their success will only help the govt when their workers retire.
ex PS
18th Sep 2017
9:35am
The government can't find a way of getting a cut from Industry Funds so it has to try and weaken them, it is just good old fashioned greed.
Do they for sure and certain? YES.
It is well known withing the industry that these funds out perform purely profit motivated financial funds, the worn out if you don't like the answer just say "does it?", will not work here.
And one of the main reason these funds do work for the members is Union participation. They help keep fees low and ensure the funds do not commit too much of the funds to speculative investments, and it works.
So easy to label anyone who does not agree with you a lefty, but by doing so you tend to lose credibility every time you do it.
Waiting to retire at 70
14th Sep 2017
1:25pm
Is the parliamentary superannuation fund an industry 'not-for-profit' fund or is it run by a financial institution?
Happily retired early
14th Sep 2017
6:35pm
Politicians super is paid by the tax payer. Their super is not subject to share market fluctuations or market risks. What a racket, what a con on the Australian people and tax payers.
Kaz
16th Sep 2017
4:24pm
And they get to retire earlier as well as take high paying jobs if they want.
Dollars over Respect?
14th Sep 2017
3:09pm
The LPGovt wants their bedfellows and supporters (i.e. ageing banking and financial executives as well as retirement aged ex-commercial and industry senior executives) the opportunity to continue to reap in additional income by insisting such people be appointed to board positions on our industry fund boards. The industry funds must pay them their remuneration and fees before the profits of the super investments can be disbursed to the super investors (will we see how much their fees amount to I wonder, as our financial institutions are no known for their transparency?. How is this in the best interests of the members - especially as the industry funds outperform the retail superannuation funds year after year across all categories. An 'outsider' board member is not required - we must ensure our voice is loud and clear. None of the banks have been able to pass the 'sniff' test when it comes to ethics. We don't want to fix what is not broken.
floss
14th Sep 2017
4:40pm
What a nasty remark that is just not true Not a Bludger . Look at what your mates at the Commonwealth Bank have done to their customers super funds and then join the real world.
Not a Bludger
14th Sep 2017
4:55pm
No Floss - it is true.

I have even been knuckled by a particular union to make payments of my employees' super to their union controlled fund even though my employees wanted their super paid into their existing accounts with funds previously selected by themselves.
Tib
14th Sep 2017
11:16pm
From what I've read in your comment Not a Bludger I suppect you weren't paying their super at all. Like a lot of employers in this country who don't pay their employees super and then tell them they will sack them if they complain. That's why we need unions.
ex PS
18th Sep 2017
9:47am
Not A Bludger, can you please tell us, what Super Funds have you come across that are Union controlled, I have seen many top performing funds that have Union representation, but I have seen none that are controlled by the Union. It also seems that those with Union representation seem to be out performing those that are just there to make money, how do you explain that?
The other thing you seem to ignore is the fact that Union representation is just another form of employer representation as the Union works for the members in most cases.
I find it quite interesting that when the Coaladdiction apologists whine about union thugs they can only manage to name two or three Unions that are involved in that thuggery out of hundreds that are out there.
I think that your employees were not victims of a thug Union as much as they were of a weak boss. I would have thought that such a champion of free enterprise and the rights of workers would have gone to the police when approached by a Union thug and told to break the law, after all workers have a right to put their Super into any account they nominate.
So reminiscent of all those bosses giving bribes to Unions, the Unions were bad for breaking the law and taking bribes, but the people who also broke the law and paid bribes thus perpetuating the problem, were victims.
disillusioned
14th Sep 2017
5:02pm
This LNP government is trying to grab at whatever $$$ they can to prop up their unconscionable budget instead of taxing their Big Business mates and cutting back on their own extravagant wages and entitlements.
arbee
14th Sep 2017
5:39pm
Why don't all of you pro union, government knockers do a google search of and read the front page of the today's Adelaide Advertiser and then you might see why changes need to be made. The AWU board member was Wayne Hanson who was a former AWU branch SA secretary and since retiring from the board is now the unions honorary president. His Super Fund board position was handed down to his son in December 2014. In February 2017 he resigned to fill a Labour vacancy in the upper house in SA. The super board position was in turn handed down to his wife at that time. I am sure she must be highly qualified for the position having been a former government speechwriter and childcare worker. Talk about jobs for the boys and keep it in the family at the same time.
Eddy
14th Sep 2017
10:10pm
Arbee, I suggest you and Not a Bludger get together and come up with a common position on reliability of newspaper reports. Not a Bludger thinks newspapers are written by 'leftie reporters' and you quote the Adelaide Advertiser as the epitome of reliability.
As for 'jobs for the boys' and 'keeping it in the family' I am sure the Packers, the Murdochs, the Pratts, the Smorgons etc etc would be moved by your sentiments.
arbee
14th Sep 2017
10:29pm
Eddy your reply just accentuates your stupidity. Even if the families you mention do pass on to their families that is a whole lot different than board positions in a super fund that is responsible for members funds. your reply today and previous comments you have made would lead me to believe that you would be a strong communist supporter and would love to see the country under communist rule. As for your comments about the Adelaide Advertiser it would appear that you are not in Adelaide and don't get to read much of its content. For as long as I can remember its editorials and political journalists have always been far left with their comments. It is only in about the past 12 months that their eyes have finally opened to the destruction the Labour government has heaped on to this state and they have actually become quite critical of them.
Eddy
14th Sep 2017
10:57pm
Thank you Arbee for your nice words. How you deduce I am a "strong communist' is perplexing since I spent 2 years (in two 12 month stints) of my life fighting the Viet Cong and NVA. Did you? Or were you one of those patriotic people who spat on me in the streets and called me a baby killer?
Actually I have no 'strong' political views either way but when I see Fascist or Communist rubbish written in these columns I feel obliged to respond.
Kaz
16th Sep 2017
4:33pm
The proof is in the pudding arbee. I can't understand why you resort to calling people who lean to the left communists in an insulting way. From what I see, those that lean to the left are more caring of their fellow human, rich or poor, wanting only fairness across the board. I don't see this in Michaela Cash.
ex PS
18th Sep 2017
9:51am
I am not a lefty, but I do not find being referred as one as insulting, I tend to agree with Kaz. My only objection to being called a lefty is that it is incorrect, actually I think being called a lefty is a bit of a compliment.
Tib
14th Sep 2017
10:58pm
The government wants all industry funds closed down. So they can look after their mates at the bank. As far as older women not having super. When women get divorced they get the car the house the kids the money but they usually leave the super to the ex , after all they can't spend that right away, now their complaining they didn't get the super as well. All I can say is keep working ladies you'll get the OAP at 70. I hope you like baked beans because that's all you'll be able to afford to eat. Lol
ex PS
18th Sep 2017
9:53am
Typical of this government if something is working right, they can't wait to interfere and stuff it up. The last thing they want is for retirees to be independent, it makes them harder to control.
We need to get rid of these malicious incompetents.
johnp
17th Sep 2017
8:12am
Yep, this issue should be made very public urgently so that Industry Super Funds are allowed to continue to give good performance results to their members and not be retarded in that important role
Pamiea
18th Sep 2017
11:33am
Because the government is dodgy!!
Pamiea
18th Sep 2017
11:37am
Tib you are out of touch and women dont get all that
ex PS
19th Sep 2017
11:28am
Mine did, but most were just things, the only thing I was disgusted with was the fact that she automatically got custody of our son. There was no inquirey into the fitness of either party.
I was lucky, as was my son, my ex-wife did the right thing right down the line, but what if she was abusive, or had a drug problem, no one cared enough to ask the question.
The one big problem with no fault divorce where kids are involved.
Dollars over Respect?
21st Sep 2017
11:30pm
LNP Govt focus on all the important budgetary, infrastructure and social issues that are broken and not-working! Mess with industry high performing superannuation funds at your own peril I say!


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