In a submission to the federal Senate inquiry on the superannuation sector, the Australian Council of Trade Unions has rejected the government’s budget measures for superannuation, stating they will leave workers worse off and erode the retirement savings of millions of Australians.
The ACTU submission stated that the proposed changes will favour for-profit funds, as performance benchmarking is based on net investment return (NIR) rather than net benefits to members.
“Current benchmarking proposals exclude member administration fees, meaning the government proposals will be deliberately misleading workers into thinking they are members of a well-performing super fund,” the submission stated.
It also noted that if the proposals become law, from 1 July 2021, everyone with an existing superannuation fund will be stapled to their current fund.
“[This means] predatory for-profit funds will target first time bank openers to nominate a super account with them, locking them into a poor performing default fund for life,” it said.
ACTU assistant secretary Scott Connolly said a worker could be “locked into an underperforming for-profit fund that is funnelling money to shareholders through exorbitant administration fees – and be misled by the government that they are in a good fund”.
“It is no coincidence that administration fees are excluded from benchmark proposals, as for-profit funds performances will be overstated to members and potential members,” said Mr Connolly.
Mr Connolly said for-profit funds will have a systemic advantage over all-profit-to-member funds if the laws are passed.
“Despite the Banking Royal Commission finding for-profit funds blatantly rorting members, the Government continues to favour them by making benchmarking based on net investment return,” he said.
“The Federal Government’s reforms to superannuation will slash workers’ hard-won retirement savings and should be completely rejected.”
It needs to be return less total fees. Returns also need to be confirmed/ verifiable and not subject to throwing a date against a dart board as currently used by numerous industry funds.
You would think they would realise “excessive” fees generating dividends could be good for their members who aren’t paying them. Seems they just want to control the sector.
You would think the Union based funds would welcome this, as the admin fees are where they hide their millions in ongoing intrafund advice fees, to pay their near on 1000 marketing reps (who don’t have to seek any form of informed consent for their ongoing remuneration). What a racket.