This campaign defends the threats to retirement savings from for-profit super’s interests.
Industry Super Australia is a research and advocacy body for Industry SuperFunds. ISA manages collective projects on behalf of a number of Industry SuperFunds with the objective of maximising the retirement savings of over five million industry super members.
This campaign is authorised by David Whiteley, Chief Executive of Industry Super Australia, 2 Lonsdale Street Melbourne 3000
For more information on Industry Super Australia visit www.industrysuperaustralia.com
Impact of the proposed reforms
There are two key Government proposed reforms that could negatively impact key features of Industry Super Funds, which have a proven track record of long term outperformance:
- Changes to the representative trustee system - The Government have introduced draft legislation that will fundamentally alter the industry super model of governance.
- Removal of superannuation from the industrial award system, including removing the current quality filter in fair work legislation to determine whether products are in the best interests of ‘default’ fund employees.
What are the problems with these changes?
There is no evidence that the current system is broken. Whatever the reason, the fact is that on average funds governed by representative trustee boards have performed better than other funds over the longterm.
They remove the requirement for not-for-profit funds to include member and employer representation on their boards, being the defining feature of not-for-profit funds across the OECD that drives a member-focused culture.
Dilutes governance standards for bank-owned super funds by allowing them to appoint a majority of bank executives to their boards (despite them already having volunteered to appoint a majority of independent trustees)
The clear alignment between member interest and the objectives of the employer associations and unions that nominate representative directors has underpinned the high ethical standards and culture of accountability that prevail in the representative trustee sector.
It is estimated that there will be substantial direct costs involved with the reforms, including:
an estimated $170 million over 5 years in red tape on not-for-profit super funds which is likely to be passed onto members in the form of higher fees. View the full report.
If employers are forced to choose from more than 120 unranked MySuper funds it is likely to impose a further cost of around $1.8 billion, most of which would be borne by small business.
It could make it easier for the banks to leverage their relationships with employers to cross-sell their super products, without the existing quality filter in fair work legislation for default fund selection, in which industry funds feature strongly.
Click here to see our Industry Super Australia’s submission to Treasury on governance reforms.