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?