Thursday, 29 October 2020
Superannuation should empower and secure an independent retirement for Australians; it should not be a honeypot for fund managers to fester fees. In this term the House Standing Committee on Economics has exposed disturbing failures by super funds to fulfil their obligations as trustees of Australians' retirement savings. Following questioning, we discovered that some super funds were using a legal loophole to secretly reactivate low-balance inactive accounts that, by law, should have been transferred to the Australian Taxation Office. By not transferring them, those funds could charge another year of unnecessary fees and insurance premiums. It was their 'fees for no service' moment.
Many Australians, particularly young Australians, don't have the time to monitor their super accounts, and these funds chose to exploit the system's complexity. The opaque sole purpose test has allowed super funds to spend Australians' retirement savings on marketing, advertising, keep cups and days at the tennis, which have nothing to do with returns and everything to do with showering themselves with up to $440 million of largess.
Most disturbing is the seeming arrogance of some funds, their reluctance to even be questioned by this parliament, with some refusing to provide information to the people of Australia. While the big four banks were happy to provide information about the amount they were spending on salaries and severances, IFM Investors refused to clarify reports that they had paid more than $30 million of Australians' retirement savings to a single fund manager in a bonus. They need to be more transparent. It shouldn't become a means to launder accountability to fund members by fund managers.
There there's the dodgy data. We hunted down a paper from Industry Super Australia that contradicted their public statements that increasing the compulsory super guarantee wouldn't impact wages or reduce jobs. So now we have Industry Super Australia joining the Treasury, the Grattan Institute and the Australian Council of Social Service as entities who agree that an increase in the compulsory super guarantee would cost wages and jobs. And if there was any doubt, the RBA governor Phil Lowe confirmed it to the Economics Committee mid this year.
The evidence of systemic problems around accountability and transparency in the super sector has prompted the Morrison government's Your Future, Your Super changes. The reforms will save workers $17.9 billion over a decade. We are preventing unnecessary fees from being charged on multiple accounts. We are introducing an annual performance test for funds to ensure that they're acting in fund members' best interests. We're creating a new website to make sure there is a proper comparison of funds. Your super is your money. We're working to ensure that the system delivers a better deal for all Australians, and we're making sure that some fund managers can't launder their take of your money.