7th Aug 2018

Some super trustees paid $100k a year to attend meetings

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Board members

Super funds are charging billions to invest your retirement nest eggs, yet some fees are higher than returns and some board trustees are each getting at least $100,000 a year to attend meetings.

That’s the finding of a data analysis from the Australian Prudential Regulation Authority (APRA) by Business Insider (BI).

It comes as corporate watchdog the Australian Securities and Investments Commission (ASIC) is set to receive a $70 million budget boost to allow it to embed staff into the big banks and AMP to fight white-collar crime. The enhanced powers were sought by new ASIC chairman James Shipton in the wake of revelations of illegal practices and misconduct at the banking royal commission. Yet, in the May Federal Budget, the Government announced a $28 million reduction in funding for ASIC over three years.

Meanwhile, at the inquiry which resumed on Monday for two weeks of hearings into the superannuation sector, NAB admitted that between 2012 and 2017, it charged its super customers more than $120 million in fees they didn’t need to pay.



NAB said it charged its MLC Super customers an administration fee of 1.5 per cent for the first $44,999, whether advice was provided or not.

Opening proceedings, assisting counsel Michael Hodge said: “Consumers are unable to do anything more than peer dimly through the darkness of their superannuation trustee. What happens when we leave these trustees alone in the dark with our money?”

But exposing the costs of funds was already the flavour of the day after BI released its analysis of APRA data from 2017 that covered about 26.5 million member accounts containing $1.6 trillion.

It was especially critical of the amounts that funds paid their trustees, finding 15 paid their trustee board more than $750,000 per year combined with some trustees getting $100,000 or more a year each to attend meetings.

“The APRA data shows (Hostplus) directors, who meet seven times a year, getting a combined $1,015,000 a year.”

Chris Brycki, chief executive of robo-adviser Stockspot, said: “It’s easy to dismiss this (trustee fees) cost on the basis that it’s spread across many members, but every dollar spent in salaries is one less dollar Australians can spend in retirement so it really should be scrutinised closer.

“There are dozens of super funds paying each member of their trustee boards more than the average Australian full time salary.”

BI listed the most expensive funds in terms of administration and operating costs per member. At the top was Perpetual Super Wrap, which charged $9580 a year.

“With all the advances in technology, these giant funds appear to be wilfully inefficient,” Mr Brycki told BI. “This is alarming.

“Incredibly, we found 11 funds that charge more than $1000 per member per year on operating and administrative expenses.

“Ask anyone who has tried contacting their super fund for information and you’ll hear a common story of long waiting times and canned responses that don’t answer the question. This type of service isn’t worth $10 a year, let alone $1000.”

BI was also critical of the big advertising budgets some funds set aside to attract new members. Construction and Building Unions Super spent more than $18 million on advertising, followed by Hostplus with $12 million.

“Advertising is ultimately an expense worn by members,” said Mr Brycki.

“Twelve funds spent more than $20 per member on advertising last year. What benefit do members get from this? Once funds reach around $5 billion in size there’s no evidence that increased scale from new members leads to lower investment or operating expenses.

“As more funds engage in a marketing war the result seems to be that costs increase and members are worse off.”

Do you believe your super fund has your best interests at heart? Do you believe you get value from your fees?


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COMMENTS

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MICK
7th Aug 2018
10:42am
Not a great surprise. Retail Funds have a large feeding trough and management sucks a lot of money out of these funds. That's why Industry Funds are slaughtering Retail Funds.
I have attended many AGMS over the years and the two things which irk me are CEOs being awarded huge salaries with other institutional shareholders rubber stamping these perverse deals and the makeup of these boards. One such company has two directors who are themselves the CEOs of other companies and you can bet your bottom dollar they do zip whilst creaming off significant additional remuneration. These leeches also sit on a number of other Boards. Get the picture.
Sal
7th Aug 2018
10:52am
Mick, Industry Fund Hostplus gets a mention.
MICK
7th Aug 2018
12:43pm
Whilst you are correct the article was primarily about directors sucking out fees of $100,000 or more for zip return other than showing up for meetings.
Indeed two Industry Funds were named above but "advertising" is a normal business practise. If this works to increase the fortunes of the business it is money well spent. Of course somebody always pays....but if the returns to members is great then is there anything wrong with doing this?
George
7th Aug 2018
12:47pm
Industry funds could have a major influence on excessive (non-performance based) remuneration - being large institutional shareholders themselves, yet do they? Maybe this is where members can start - by pressuring their funds to stop rubber stamping greed in companies where they invest.
KSS
7th Aug 2018
1:36pm
" The APRA data shows (Hostplus) directors, who meet seven times a year, getting a combined $1,015,000 a year.”

"Construction and Building Unions Super spent more than $18 million on advertising, followed by Hostplus with $12 million."

Missed these two snippets did you Mick that apply to industry funds?
MICK
7th Aug 2018
1:40pm
Saw that KSS. Now provide figures for the worst performing Retail Funds and we'll compare apples with apples.
I am not trying to stick up for unions but much of what is floating around as 'comment' is little more than propaganda with an election looming.
Lets talk. Supply the figures.
arbee
7th Aug 2018
1:40pm
Mick, you conveniently forget to mention the leaches who also sit on the industry super funds as well, mainly comprised of union leaders and their lackeys, who are getting the same remunerations as well as their exorbitant union paid salaries. Oh, sorry I forgot to mention, some of them donate a portion of these meeting fees back to the union they are involved with and get a tax deduction for their generosity. They are all tarred with the same brush, pigs with snouts in our super trough.
KSS
7th Aug 2018
1:45pm
Don't worry Mick, you obviously missed this snippet too:

"BI listed the most expensive funds in terms of administration and operating costs per member. At the top was Perpetual Super Wrap, which charged $9580 a year." But I don't remember seeing advertising for them!

And this is only day 1.
MICK
7th Aug 2018
4:07pm
arbee - fake news again! My reading indicates that union representatives on the boards of industry funds are half the members. They do not get paid but the union which employs them does. The union then pays its employee. Clearly that is wrong in your eyes and you never got paid for any work you ever did.

KSS - I had a look at the figures and they were VERY black and white. The cost per member of boards, measured as a cost per member, was the least for Industry Funds. This included most of the top 20 funds. You may want to check out funds like Equity Trusts, Netwealth Investments, First State super and BT retirement wrap, etc. It's a long list here:

https://www.superguide.com.au/comparing-super-funds/how-much-do-your-super-fund-trustees-get-paid

About half way down. The government trolls may want to spend time on this as well because the information is clear cut: Industry Funds are charging members less. Much less.
So if the union members on the boards are doing such a wonderful job for members what is this all about? Exactly. Sucking this money into the bank accounts of the top end of town.
TREBOR
7th Aug 2018
5:28pm
Look out, Mick - you'll set off some emergency alarms by posting links and facts. I can detect the sounds of silence now...
floss
7th Aug 2018
10:47am
Yes Mick I did see the Trans Grid board in action, it is as you have said.
MICK
7th Aug 2018
4:10pm
Its pretty across the board....pardon the pun.
Voting on remuneration is determined by institutional shareholders and you get directors who probably sleep through meetings and contribute little if they are also CEOs of companies.
This is let go as sound government by our business owned government which refuses to rock the boat when the North Shore set are making taking the savings of ordinary Australians.
Not a Bludger
7th Aug 2018
10:50am
Oh Lordy, Lordy - who would of thunk it?
Union, thug bosses paying themselves $100’s of 1000’s of dollars in trustee fees to the detriment of the members that they claim to represent.
At best venal and immoral - at worst quite criminal
And, don’t forget that these are the very same union, thug bosses who force their members to pay their super into these union controlled funds, in the first place!
Robbo
7th Aug 2018
11:00am
Quite correct Not a Bludger and I see two union funds spending $30 Million on advertising what a waste that would only be to gain more members and increase the trustees take home .
People in these funds reckon earning 10% each year is great they don't realize that they are being ripped off another 5% to 7% paying the union scum that are called Trustees.
Eddy
7th Aug 2018
11:52am
NotaBludger and Robbo, ask yourself what about other public benefit entities that spend inordinate sums of money on advertising and sponsorship. Like banks, health funds as well as a plethora of "wealth creation" entities such as AMP and MLC and others, even governments. While huge stipends, like those mentioned in the article, seem excessive let us wait until the RC puts the spotlight on these practices before we castigate what may be reasonable expenses. You are basing your anger on a unsubstantiated report which may or may not be correct. Just let us wait for the full facts to come out.
MICK
7th Aug 2018
12:35pm
Bludger: it is NOT the funds which have union representation who are rorting the system. IT IS THE RETAIL FUNDS where the well heeled business people from the top end of town are piling in for their part of the action.
Why do you think Industry Funds are earning almost double what Retail Funds earn?
You seem to have an unbalanced hatred of unions and I have to ask what you did as a job to develop this unbalanced attitude?

Robbo: most Retail Funds do not achieve 10% return. So what are your well heeled mates sucking out of these funds? You can attack unions all you like but the money trail is clear to see.
arbee
7th Aug 2018
1:42pm
Mick always comes back with the answer, "the retail funds are earning more", so does that give them the right to rip off their members of their funds, I don't think so.
MICK
7th Aug 2018
1:47pm
???? A bit early to bee in the parliamentary bar arbee.
I challenge crooks to address the facts, inconvenient as they may be. Something you have no wish to do.

To correct you I never said 'retails funds are earning more'. What I said was they were being ruthlessly milked by the top end of town and this is the reason why their returns to members are so low. But you know this.
Not a Bludger
7th Aug 2018
1:58pm
OMG - and in thunders Mick, the Getup and union office worker - troll off somewhere else Mick.
TREBOR
7th Aug 2018
5:14pm
Sorry, old boy - ad hominem labeling is passe` - post facts.

We, the general audience, do not wish to see discussion descend into the open sewers of name-calling and unfounded accusation and innuendo....
Not a Bludger
7th Aug 2018
5:34pm
Problem for you Trebor - despite trying on a bit of Latin - is that this publication/column - has partnered with Getup and can hardly be categorised as independent or representing seniors/retirees - as it seemed to be when it started.
People like mick are no more and no less than the red shirts of this biased column.
old frt
7th Aug 2018
11:46am
What's the difference between management , super boards, public company boards and union boards not much. ( yes Mick union boards also, it's not often I agree with most of what you quote ).They all look after No.1 first and then their mates, poor old members and shareholders are just there to be fleeced. Cross boards are not in the best interest of small shareholders and members. An example is a company like Sol Pattinson look at their cross board connection with other companies like Milton investment co. New Hope Coal, Brickworks Ltd TPG Ltd and many more they control. How do you change the focus of such companies?
MICK
7th Aug 2018
1:50pm
Correction - my understanding of Industry Funds is that there is a union representation, not that they are run by unions.
I'd like to see what a Board with a couple of union reps actually pays them compared to directors on a Retail Fund Board. That would make interesting reading and might shut down the trolls posting their misinformation.
Rae
7th Aug 2018
2:03pm
Yes MICK it's a furphy. Industry Boards have Employer reps, a union rep and some independent reps.

Boards in general have around 240 of the same people on them just milking the system.

This article was about the trustees. I'm assuming they mean the Administrators. Completely different and worth $100 000 salary if this is in fact who they are talking about.

Layers of management all wanting their share.

The original Superannuation made sense but what we have now certainly doesn't.

People have no savings because it's all tied up until they ate 60 or 65.

Come the next market correction and the savings disappear there will be screaming and those being paid wads won't care. It's not their future at stake is it?
Jim
7th Aug 2018
3:14pm
I think that in industry superannuation funds the board is made up of an equal number of union reps and company reps, so I can’t see how either side is in a position as to who actually runs the fund, it has always seemed a fair way to run these funds, but as I have explained in previous posts the industry superannuation funds have a compulsory life insurance component, at least the ones I have been a member of, I know the main one I was a member of which was the one operated by Port Kembla steelworks had a minimum of 3 units per pay, most of us that I knew paid 7 units per pay, if my memory serves me at all the unit cost was $3.57 per unit, I tried to get this removed but couldn’t, I believe this was a disadvantage to my final balance by many thousands of dollars. As far as the remuneration that the union reps received this was paid directly to the union, so the reps received no financial benefit from their participation, as far as I am aware. The remuneration that the unions received went into their coffers to be used as they saw fit, if that included financial support to the Labor party that would mean non Labor voters were indirectly funding the Labor party, but I suppose you could also say that anyone who spent money in any of the businesses that supported the LNP were indirectly funding the LNP. So how’s that for a bit of balanced commentary?
MICK
7th Aug 2018
3:53pm
I believe you are correct Jim but what I have not been able to find out is if union trustees on boards are paid or not. Indeed are any of the directors paid for their services? Certainly looking at the retail sector the pay is significant but information for the above seems to be hard to find.
Jim
7th Aug 2018
4:57pm
From the report I read on line yesterday, the remuneration paid to union reps is exactly the same as company reps, the only difference is that the union reps remuneration is paid to the union body itself, the union reps as far as I am aware are only paid their normal salary from the union itself, the amount paid over 4 years was reported to be $20 million, this figure wasn’t denied by the president of the ACTU I think her name was Ged Delaney or something like that, she said the amount paid was the same as the amount that was paid to the company reps over the same period, and this was paid to two of the main union bodies, if the figures are accurate that means $40 million was taken out of the funds by the trustees of those two funds, maybe they earned it maybe not I don’t have the answer, but it’s one reason that all funds need to be investigated, it’s no good any of us trying to preempt what a RC will find out, thing are not always what the seem on the surface.
Jim
7th Aug 2018
5:03pm
The presidents name was Ged Kearney, who has since been replaced after winning a seat in parliament.
TREBOR
7th Aug 2018
5:28pm
Yes - gotta enhance your own superlative super fund.....
Cosmo
7th Aug 2018
12:25pm
Now with the Royal Commission in full swing is a good time to write to your superfund if you have any complaints. I had been pointing out to my wife's industry fund many times that they were charging her thousand's of dollars for 'advice' that she was not receiving and we didn't need anyway. So I wrote again to the fund and pointed out that the Royal Commission had come down hard on this bank rort and super funds would be next. Guess what? A letter from them quick smart saying they had discovered this 'oversight' and her account would be credited with over $12,000. If you too have been ripped off, give it a try!
Have a look at your fund's online annual report but have a large bucket nearby because the fees these directors and trustees pay themselves will make you sick. Then when they get questioned at the RC "they say didn't know what was going on." So what are we paying these outrageous fee for? They are paid to know!
MICK
7th Aug 2018
12:38pm
I look forward to ALL super funds being scrutinised. The returns are a clear indication that something is wrong and there has to be a reason Retail Funds are doing so poorly. Probably the same reason some of the above anti union posters are trying to blame shift.
I hope a senate committee looks into trolling activities as the Tasmanian Liberal Party troll is but one on many who demonise one side of politics with rarely a justification in sight. Chinese developers and tax cuts anyone?
GrayComputing
7th Aug 2018
1:20pm
A few years ago I was losing well over half of my super which was then with MLC.
MLC were still charging me thousands of dollars each year whilst losing over $100,000 of my superannuation fund.
My financial adviser closely tied with MLC did nothing.
A lot of funds were locked in and could not be extracted till many years later at a huge loss.
I consider that the whole private superannuation scheme started by Keating has been a massive loss to all working Australians not just me.
Of course the money was not really lost but ended up making some other companies and share traders even richer
I dare and challenge the committee to calculate and publically declare the total money loss to all the Australian superannuation contributors over the last 10 years.
I strongly suggest superannuation be allowed to go into the Australian Future fund which has done so much better than any and all of that bunch of merchants pirates who lied and called themselves good superannuation companies on TV whilst I and other were losing billions.
MICK
7th Aug 2018
1:43pm
Its just like ANYTHING which is privatised. The top end of town get their snouts into the feeding trough and then we get wealth transfer from average to top.
This is why this government is raging its war on Industry Funds. They want their rich mates to get into them like sharks into a whale carcass. The fact that Industry Funds are far outperforming Retail Funds is no more than a distraction to this lot and only apathy and ill thought out ballots will allow this to happen.
KSS
7th Aug 2018
1:42pm
Why are industry funds advertising at all? They are closed to the general public and if you work in that industry then it is the default fund for the employer unless you choose to opt out. No advertising necessary.I bet those in HOSTEC for example would like the extra few dollars to come off their own fees rather than pay for unnecessary advertising at $20 a head!
olbaid
7th Aug 2018
2:31pm
Check out who they are giving the advertising contracts too?

Probably their labor mates and who knows what kickbacks are received down the line

With the unions and labor its always jobs for the boys and girls in their club
TREBOR
7th Aug 2018
5:29pm
Does the advertising work? Nuff said..... not too many Labor mates in the advertising business....
Rae
8th Aug 2018
9:51am
I think you'll find the jobs for the boys and girls all over olbaid. It explains why so many right wing IPA employees end up in top public service, political and judicial appointments.

The IPA advertising budget isn't shabby either is it? Not that Gina minds spending on some things that suit her agenda.

That old school system works equally for Labor and Liberal.

Most Boards are composed of the same few 240 people. From the right schools apparently.
They are as bad as each other when it comes to appointing ideologists to suit their beliefs.
olbaid
7th Aug 2018
2:28pm
Yep always knew the fat cat labor union thugs sat on these boards and milked it for all its worth.
Add the hotel bills, alcohol and entertainment, gifts for nthe boys etc etc and the rorting would be well into the hundreds of millions
MD
7th Aug 2018
7:38pm
Correct, not to mention the gopher dispatched at lunchtime to the local patisserie for 'tarts' ! How sweet it is.
Rae
8th Aug 2018
9:55am
They can't beat business leaders though. They manage to get in up there in the billions.

Those 6 managers of the $440 million Fund for the Great Barrier Reef were paid $40 million alone. Maybe union thugs need to take lessons from the top end of town in milking taxpayers for all they can.
Old Man
7th Aug 2018
3:45pm
I see that the argument about Retail Vs Industry has been hot today. The discussion appear to be about the wrong matter. There is good evidence that Industry funds are, in the main, paying a higher return to members as against Retail funds but the FSRC cares little about that fact. They are looking at the governance of the super funds, be it Industry or Retail, and seeing if there is a misuse of funds which may actually belong to members.

I have read a lot about the super funds over the years and most, if not all, has been about the status of the funds, the returns they achieve and the ranking of different funds, one against the other. I have read that some funds make large payments to administrators and others have made donations to outside parties. What has not been made public, probably because nobody knows, is the percentage of remuneration against assets or the percentage of donations against assets. These are the objectives of the FSRC and I'm sure that the results will be interesting to some.
Jim
7th Aug 2018
3:52pm
Excellent point
MICK
7th Aug 2018
3:56pm
Correct OM. Classic neo liberal politics - ignore the results and play the man until you can game the system.
Ultimately the returns to members is what counts and the top end of town cannot live with that.
Old Man
7th Aug 2018
4:05pm
Sorry MICK, I have trouble understanding your response. Is the "Correct OM" a touch of sarcasm? If so, what results have been ignored and how is my comment in any way playing "the man". My comment was purely and simply to point out that what the FSRC is looking at is something that none of us really knows anything about which is the use or misuse of members' funds by administration.
Jim
7th Aug 2018
5:11pm
You are correct OM it would seem the response is to play the man and not respond to your comment, it’s the way of many on the site if you can’t criticise the comment, then criticise the person and politicise the comment to make it acceptable to their way of thinking, there are many good and responsible comments on the site then there are the others,
Adrianus
7th Aug 2018
5:23pm
"Ultimately the returns to members is what counts "

MICK that's not true at all. Ultimately it comes down to the members getting a fair deal.
I wonder where the money comes from for CBUS Stadium. I thought one would need to fork out a few bucks to get naming rights to a sporting stadium??
olbaid
7th Aug 2018
6:05pm
"Ultimately the returns to members is what counts and the top end of town cannot live with that" .says Mick

Agree wholeheartedly Mick. Am very happy when my investments in companies like CBA, NAB, RIO , BHP etc etc maximizes shareholder returns
Loved the profit announcement by Transurban today. Profits doubled
Cant wait for Origin results
TREBOR
7th Aug 2018
6:37pm
Do they also maximise returns to treasury?
olbaid
7th Aug 2018
8:24pm
Yes of course Trebor

The higher the profits the more tax paid to Treasury

Win for shareholders and win for taxpayers
Adrianus
9th Aug 2018
3:57pm
Why is the sponsorship of CBUS Stadium such a big secret?? Why cant members know how much of their money is sponsoring the Titan's Stadium? And why??
TREBOR
7th Aug 2018
5:11pm
The public guns were aimed,
And the shells were coming fast,
The leeches on the big boards,
They knew it couldn't last...

apologies to the song 'Sink the Bismarck'....
TREBOR
7th Aug 2018
5:17pm
Well - after all that dust settled - sounds like the Trebor Scheme is more viable and more trustworthy..... at least you'd only be paying one set of fees etc to trustees etc..... gee ..... sounds a lot like the great privatisation lie that was supposed to produce better service and lower costs due to 'competition' ....

(**continues to roll on floor laughing**)....
Rae
8th Aug 2018
10:00am
Would be interesting to see how many billions were added to the negative side of our Balance of Payments from all that "more efficient and cheaper" Great Privatisation Robbery.
Seenitall
7th Aug 2018
6:53pm
Certainly something rotten in the state of the retail super funds and I can only hope the Royal Commision is given the time and means to sort it all out. I'm not that optimistic though looking at the latest developments in keeping the banks honest.
Anyone who has doubts about the government's plan to embed the financial police within the big banks should watch tonight's edition of "The Drum" on iView in which panelists clearly demonstrate the history of the incestuous relationship between ASIC and the banks.
heemskerk99
7th Aug 2018
7:23pm
just finished wasting my time reading the comments of the dumb, dumber and dumbest, labor mickey/tremor belong to the latter, just read its last two posts, my excuses to o.m and adrianus, however it just proves my point if you don't want to look after your own money don't blame those who are only too willing to relieve you of that task by pocketting your dough, any of you ever had the thought of doing it yourself or are you too lazy or are happy to see a large slice of your future income being pocketted by these sharks? ever heard of smsf [ self managed super fund ]
MD
7th Aug 2018
7:48pm
Ahh heemskerk99, now your smsf's may well prove to be a sore point yet. Rumour has it that the terrible tax man has em in his sights and if this proves to be true, listen then to the sad and sorry tales of woe.

Has Geezer fallen off the twig or taken a well deserved break from the relentless grind ?
heemskerk99
8th Aug 2018
9:09pm
md, who then lives will then worry, rumors are rumors, I am only too happy to show them my books, especial showing them how other dumb and dumber are paying the sharks who are happy to relieve the lazy, uneducated mob of their savings, regardless of the sharks being employed by the banks, employers or the unions, every time I see an advertisement on behalve of the super funds, may it be to save the reef, plastic bags, fish, unions, coal etc or hear the salary earned by another director, they take it in turns, I have a laugh and think that is another quid (pound) in my pocket, as far as asking geezer if he has fallen off the twig, my thought is, he has given up on the ultra stupidity of comments made in these columns such as "better to live in finland", would this person making that comment even know where finland is or the ripper to beat it all"tremor scheme" it is roll your own and I light it with my lighter while I hold your money pouring the petrol over your head, anyhow good luck md, one can believe in the fairies or one can believe in the realities of life
Adrianus
9th Aug 2018
3:53pm
MICK,
I'm not sure I understand how members in CBUS industry fund benefit from the massive advertising budget? The enormous sponsorship of the AFL's Greater Western Sydney Giants. Or the funds biggest sponsorship of the Gold Coast CBUS Stadium.

When you go to all those AGMs, have you ever heard ex Labor Premier and current CBUS Super Chairman Steve Bracks make any comment on how members are advantaged by all the advertising and sponsorships?
heemskerk99
9th Aug 2018
5:03pm
his only non political position was being a teacher and seeing not many young people know how to count without using a machine which will do it for them yet people still wonder why so much money is being ripped off from the funds and to top it off they are ex-politicians, usual the ones who never were any good at their job who still can't get their snouts out of the trough
Adrianus
10th Aug 2018
2:42pm
I don't understand why board emmbers on industry funds get paid more than they would on retail funds? MICK, you go to all the AGMs, can you shed any light on that please?
heemskerk99
10th Aug 2018
5:58pm
adrianus, adrianus, fancy asking our beloved labor mickey/tremor that question, everybody knows he only goes there to assure that his union/labor mates don't have to take their snouts out of the trough, he be the one even the board chairman has to ask of him to stop clapping and cheering for more money for his mates as so the agm can be finished before nightfall.


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