Morrison attacks union default funds

4 June 2018

The Federal Treasurer, Scott Morrison has attacked superannuation default funds as being nothing more than a fire hose of money, pouring money into accounts for which the funds themselves do not have to work.

Speaking to the media, Morrison signalled the Government would be strongly backing the Productivity Commission’s (PC’s) recommendations around default funds.

Reinforcing the Government’s recent action on superannuation, Morrison said the Government had been pursuing greater levels of account consolidation and had banned exit fees but then pointed to the Productivity Recommendations around default funds and super fund board governance.

Related News:

“We want there to be more choice in superannuation. We want there to be more transparency in how superannuation funds are managed. We'd love to see more independent directors on superannuation fund boards,” he said.

“We would like the Productivity Commission's recommendations they've made about default funds and how workers can be shoehorned into funds without any choice,” Morrison said.

“I mean, that's not good. The job of superannuation funds shouldn't be to sit at the end of a big fire hose of money, pouring money into their accounts and not having to work for it. It is important that consumers should have choice and that is what we want to give them,” the Treasurer said.

Recommended for you




ScoMo seems to have failed to read the Productivity Commission report, especially the bits about the over the top fees charged by the for-profit funds and the for profits funds being the poorest performers. He is such a great obscurantist - performs without troubling the facts or his faith.

Hedware, delving into people's religious orientation or beliefs is probably a little low in trying to draw a connection to anything to do with commentary on superannuation matters.
However, one of the main and concerning issues that has been simmering in the background for some time now is the manifestly unacceptable relationship between the industry super funds and the trade unions.
As the industry super funds have effectively tried to develop and market themselves as public offer funds designed for all and not just employees of certain occupations, it is unconscionable the volume of monies that have been provided to trade unions can in any way be acceptable as satisfying the Sole Purpose Test.
The creative nature of how the trade unions are provided these monies via directors fees of industry super fund board
members should be immediately banned. These third party payments are a form of compensation to an employer for a director giving their time to an industry superannuation fund, but research and analysis has shown that between 2013-14 to 2016-17 almost 70% of the $26.14 million in third part payments was paid to trade unions thereby totaling a massive capital injection of monies to the tune of $18,438,516 during this period.
The five biggest recipients of these monies in order were the CFMEU, United Voice, ACTU, AWU and the AMWU.
This is nothing more than a protected siphoning and political funding machine using monies that could be retained within these superannuation funds for the benefit of their members retirement.
There may be many members of industry superannuation funds that do not support the ideology and practice of the union movement and who are not a union member, but have no say in the financial support their fund is providing to a militant union who enforces stand over tactics to achieve their goals.
The best thing ScoMo and Kelly O'Dywer could do immediately is to have the courage to put a cessation to this practice based on a direct breach of the Sole Purpose Test.

I don't beleive this is a contrvention of the sole purpose test. this is a secondary donation of the money paid to the directors. (ie after the super fund has paid the directors). This is unlike using super fund for advertising for new members, which is outside of the sole purpose test as I understand it, or using money to pay lobby groups. What would be interesting is if directors were held responsible for breaching the sole purpose test and had pay a fine. Perhaps gifting the money away would be a little less appealing if there was a chance you could be held responsible for things done while you were a director.... this is what has occurred with AMP where we have seen a number of directors leave the company, but I am not aware of any fines imposed.

Interesting analysis and which as stated is a very creatively structured way of transitioning monies to trade unions. If there were a very small number of directors that individually elected to donate their own fees to a particular movement then it would not necessarily appear to be a structured strategy of transitioning enormous volumes of funds.
If directors elected not to receive any fees, these monies could be left within the funds to benefit the members.
If it doesn't technically breach the Sole Purpose Test because of the way in which it is structured, then it probably does push the moral and ethical boundaries, the best interest duty and provides an enormous amount of bargaining power to the recipient.
When Industry Super Funds spend millions of dollars by having the AFL repeat "Compare the Pair" at every single opportunity, how does this meet the fiduciary duty of the Trustees to be acting in the interest of their members?
They may well argue that by increasing the numbers of members and volume of funds this will create economies of scale in operating costs and therefore result in a lower fee cost per member, but how is that monitored and how do we ever know that the extra funds are simply directed toward higher advertising and promotional expenses and higher directors fees which are then in turn donated to the trade unions as currently is the practice.
When HostPlus provide discounted tickets to members who want to go and see a game of rugby, how is this decision
enhancing the retirement incomes of their members ??
No wait....I can hear the answer from ISA now......the money those members save on their rugby tickets can be contributed to their superannuation account, thereby growing their superannuation nest egg !!!.........yeah right.

Add new comment