10th Oct 2017

Submissions to parliament suggest super changes go too far

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Proposed super changes go too far
Ben Hocking

Consumer groups, unions, industry super funds and company directors are united in their concerns about the Government’s proposed superannuation changes aimed at increasing transparency and strengthening the powers of the Australian Prudential Regulation Authority (APRA).

Public hearings into the proposed legislative changes were held in Sydney on Tuesday and most of the submissions criticised the amount of time that the groups concerned were given to scrutinise the incredibly complex changes.

The most contentious changes centre around the introduction of independent directors and increased APRA powers.

Consumer group CHOICE gave the changes a mixed review. Its submission supported moves to help consumers better manage their accounts and the closing of the salary sacrifice loophole, which has seen unscrupulous employers strip away retirement savings. But it was critical of the reform to introduce independent directors onto the boards of industry super funds.



“We agree there are sound principles behind the reform to introduce independent directors, however we see the need for refinement,” the CHOICE submission stated. “The Bill has the potential to destroy the unique value and culture brought by member directors.

“Our review of the available evidence suggests that member directors, where appropriately selected, can contribute to good governance, so a role for them should be retained.”

CHOICE was also concerned the increased APRA powers were not supported by appropriate guidance on how the powers would be used.

Industry Super Australia was highly critical of the proposed reforms, claiming they heavily favoured retail funds.

The Australian Institute of Superannuation Trustees (AIST) recommended that the Senate reject a push by the Government to mandate a governance model for superannuation funds, noting that no evidence has been presented showing that the current system is failing members or that the proposed model would improve member outcomes.

“The removal of the equal representation model from the legislation will remove the guaranteed voice of the members and of the employers, which currently ensures a balance in decision-making and a true understanding of the membership,” said AIST CEO Eva Scheerlinck.

The Australian Council of Trade Unions (ACTU) was also critical of the proposed changes, claiming that some of the exemptions given to pooled superannuation trusts actually work against increased transparency.

The ACTU says “there is no consistent case, alleged or proven, to say that there are any systemic issues with the operation of the superannuation system which merit a round of legislative change such as is being proposed and that no case has been made to say such problems exist.”

The Association of Superannuation Funds of Australia (ASFA) was critical of the time given to prepare its submission and was not convinced of the need for change.

“ASFA’s view is that the regulatory burden for superannuation fund trustees is already heavy and that any addition to that burden, such as the measures proposed in the Bills, should be made only where it is absolutely necessary,” its submission read.

“We are not convinced that all of the proposed measures are absolutely necessary for APRA to perform its functions or that the additional cost of implementing the new measures is outweighed by the benefits.”

The Australian Institute of Company Directors (AICD) was worried about the potential unintended consequences that could result from rushing through the legislation, while also questioning the new APRA powers.

“The powers granted to APRA under the Bill are too broad and go beyond that which is required to achieve the government’s policy objective,” the AICD statement explains.

The Financial Services Council (FSC), which represents retail and wholesale superannuation funds, was one of the few submissions that fully supported the changes, with few amendments.

What do you think about the proposed super chances? Are you concerned about what it may mean for your returns?

Related articles:
Calls to clean up super fee-asco
Govt attacks industry super again
Super tax carve-up explained





COMMENTS

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Waiting to retire at 70
11th Oct 2017
10:52am
Softly, softly, catchy monkey.

Industry Super Funds have consistently given significantly greater returns to its members than retail funds (banks, AMP, etc).

Fact: An extraordinary 94 per cent of all public offer bank-owned fund assets and 97 per cent of their member accounts are held in funds that earned below median returns

Fact: 96 percent ($42.9 billion) of cumulative fund-level investment returns above the median over the last decade were generated by the not-for-profit sector. In contrast, the retail sector accounted for 96 per cent ($25.4 billion) of value lost relative to the median.

Can't have that, can we? The banks, insurance companies and other robber barons actively encouraged in Australia, want to get their hands on not-for-profit funds. Leading the Charge is ... Senator Michaelia Cash:

Her latest scandal -
"Senator Cash told Parliament she had been made aware of the allegations** In October 2016 — but Mr Hadgkiss was appointed commissioner of the ABCC in December 2016.

** "In the Federal Court, Mr Hadgkiss admitted he knew about material distributed by the precursor to the ABCC, the Fair Work Building and Construction Commission (FWBC), that suggested employers could make reasonable requests to stop union officials holding meetings in workplaces.
Under changes to the laws, the employer no longer had that right and unions could meet workers in meal rooms for talks if needed.
Mr Hadgkiss was the head of the FWBC at the time."
Tib
11th Oct 2017
12:49pm
Well said , Mal and his mates go near my super and I will be very angry.
Crimmo
11th Oct 2017
11:14am
Governments always give very limited time for public submissions to its White Papers, etc, because basically they do not want public input.
ray from Bondi
11th Oct 2017
9:37pm
start reading from the back the nasty poison is always hidden till too late
Travellersjoy
11th Oct 2017
11:17am
A government that destroys a successful model for superannuation that benefits millions of Australian workers rather than the blood suckers who leach off us, should beware citizens with cricket bats and worse.

The purpose of government in a democracy is to serve citizens first, not corporations and their privileged shareholders - more corporations.

The big LNP lie, that we are all shareholders by virtue of our superannuation is looking more and more threadbare as the rich syphon off all the profits for themselves.
Rosret
11th Oct 2017
12:02pm
It isn't a successful model for superannuation at all. It has been the biggest mistake ever and crunch time will be in the next 2 decades when no one is on the old retirement schemes.
If you are lucky enough to accrue $1m in super then you could give yourself 5% p.a. and hopefully not eat into the principal - but how many super funds can offer that? Remember $1m in 20 years won't be worth a cracker let alone 5% of it.
However I need more research to determine the effect of the proposed changes mentioned here.
Tib
11th Oct 2017
12:51pm
I agree travellersjoy.
ray from Bondi
11th Oct 2017
9:40pm
yes I agree, you seem surprised that a liberal government has no concern for the plebs and disadvantaged, that is their DNA support the rich at the poor's expense
Old Man
11th Oct 2017
12:04pm
Reading the proposed legislation suggests to me that all superannuation companies are included, not just the union controlled funds as this article intimates. Any independent oversight of the way that funds are invested by superannuation companies cannot be a bad thing. It has been pointed out that industry funds outperform others but what has been omitted is the funds donated by some industry funds to the Labor party. I have always found it uncomfortable for my union funds being used to support a political party rather than being used to fight for better wages and conditions. In the same vein, a member's superannuation account would be better off if funds donated to a political party were instead deposited into the member's account.
Rae
11th Oct 2017
12:20pm
I agree. We would also be far better off if the companies our funds were invested in didn't pay donations to the LNP.

Stopping all political donations would be a very good move.
KSS
11th Oct 2017
12:36pm
I tend to agree with you Old Man. Independent oversight may not be a bad thing. What is perhaps more important is to move to investigate the widening disparity in returns from NFP and retail funds.

Perhaps there should be an investigation into why this is given that the fund management and staff are all essentially doing the same job in the same market. So in the spirit of 'equal pay for equal work' perhaps there should be pay scales that are capped at a reasonable level by the Fair Work Ombudsman (this 'reasonable level' should not exceed the PM's basic salary!). If less than half a million is good enough for Australia's CEO it's good enough for a superfund CEO.
Tib
11th Oct 2017
12:55pm
They donate to the Labor party? And still make more than the bank funds impressive. A good reason to keep Mal and his leeches out of it.
Tom Tank
11th Oct 2017
3:21pm
Industry funds do NOT donate to the ALP. Unions certainly do but not the superannuation funds. These funds have equal representation on their Boards of employers and unions.
This business of donations to political parties is an excuse by the LNP to emasculate the Industry Funds because they embarrass the bank the insurance company run funds.
The banks are after all major contributors to the current government and "he who pays the piper calls the tune"
Old Man
11th Oct 2017
5:20pm
Yes Tom Tank, Industry funds don't donate to Labor. Industry funds donate to unions who, in turn, donate to Labor. As regards banks being major contributors to the current governments, again you are correct. You have omitted to mention that banks are also major contributors to Labor. Check the link.
http://www.abc.net.au/news/2017-02-01/australian-political-donations-searchable-database-2015-2016/8208090
Big Kev
12th Oct 2017
6:00pm
Don't ruin a good story for the sake of truth Old Man. Most Industry Funds earn between 25 and 45% over the return of funds with Independant directors and financial Institutions funds. Perhaps because Industry funds don't pay their directors outrageous profits as happens in private enterprise. Union Directors receive a salary in their job so donate their fees back to the union. Affiliated Unions (not all unions and also not all Industry Linked Funds Union Directors) donate to the Labor Party just as commercial entities donate to both sides of politics (but especially the Liberal Party).
Tib
11th Oct 2017
1:10pm
This is just a way to increase the costs and charges of industry funds so retail funds can compete. The banks have been trying to get your super for a long time and the industry funds have been providing a service they can't compete with. They are very keen to take you for every dollar you have and Mal will help them.
DaveL
11th Oct 2017
1:58pm
Independent Directors. We currently have non executive directors on listed company's boards. How many comapnies have lost value over recent years. Are these the types that this legislation is proposing ?
It time that member directors were appointed. A bit of self interest would go a long way.
Being retired I would jump at the chance.
I belonged to an Industry Fund and it served me well. In the end I needed a challenge and made my own decisions.
floss
11th Oct 2017
3:00pm
If I wanted the banks to run my super I would go to a bank.The big end of town can keep their greedy hands off my super.We all know this government is only for the rich and greedy but this is beyond belief.
Tib
11th Oct 2017
7:55pm
Good comment. You get my vote.
ray from Bondi
11th Oct 2017
9:42pm
here here
DrPolymath
11th Oct 2017
4:23pm
Trust the incompetent Lieberal government to screw things up. Take their superannuation off them. God knows, given their bloated pensions, they don't need it.
ex PS
12th Oct 2017
10:18am
Even better, make them run their Super Funds through a bank and only let them have the same type of policy's as the rest of us. They will soon change their minds.
Dollars over Respect?
12th Oct 2017
12:43pm
Yes I am VERY concerned. Rushed legislation is never wise (look at all of the backdowns in ill-thought through policy suffered by the NSW State LNP to date) ... it's just another case of railroading! There is NO evidence the current Superannuation governance needs to be changed and, certainly, no need to introduce additional costs which are anticipated to outweigh any 'supposed' benefits. This is a clear case of "Don't fix what is not broken"! I don't want to further reduce my superannuation savings with unnecessary additional costs. Something which is a major concern is that The Financial Services Council (FSC), which represents retail and wholesale superannuation funds, was one of the few submissions that fully supported the changes! The reputation of our banks certainly warrants alarm and I decided a long time ago that I don't want any of them making investment decisions on my behalf and taking exorbitant fees for the privilege. The results are consistent - Industry funds outperform Retail Funds. Touch it LNP and your out!
ex PS
12th Oct 2017
4:57pm
The way these ratbags keep fiddling with Super I am considering taking the lot out as a lump sum. I just don't trust them.
Blossom
15th Oct 2017
2:34pm
We are being severely punished for saving and investing all we can in super. I would never put extra funds in super if I was planning to buy a house or start a business, especially as a family business or even just self employed. If you get into genuine dire financial difficulty and wish to withdraw any of YOUR funds, the paperwork to prove genuine financial hardship is hard and time needed to do this is unbelievable. Even if you are approved you still wait weeks for YOUR money. In the meantime you may have a house mortgate and business loans you need to make payments for and get a bad credit rating. Also you could lose your house and shelter, be unable to rent one because of your credit rating or have to close your business and dismiss loyal employees. I personally (not me) know of one such case.


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