The Australian Council of Trade Unions (ACTU) has rejected the Government’s superannuation reforms as it believes they will leave workers worse off and erode retirement savings.
The ACTU said current benchmarking proposals excluded member administration fees that would leave to Government proposals “misleading workers into thinking they are members of a well-performing super fund”.
“This is an attack based on ideology, rather than the best interests of workers as those in industry funds can expect to retire, on average, with a larger balance at retirement due to better performance and lower fees,” it said.
“Extraordinarily, the Government’s proposals also seek to grant the relevant minister the authority to deem any expense, investment, or activity, by any fund, at any time, illegal.
“Funds would be beholden to a single minister’s preference as the minister is not required to give notice nor reason, and these regulations are not able to be challenged in court.”
On the stapling proposal, ACTU assistant secretary, Scott Connolly, said a super member 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”.
Connolly said the exposure draft legislation represented an “attack” on working people, their retirement savings, and the “best-performing and best-governed superannuation funds”.
“The Federal Government’s reforms to superannuation will slash workers hard won retirement savings and should be completed rejected,” he said.
Comments
The Best Interest duty should solve any problems (real or imagined) covered by this new legislation which is unnecessary !
Interesting that the ACTU has put their own name to this, rather than hiding behind one of their puppets such as "Industry Super" or AIST or the Labor Party.
In part it was the ACtU that bought about the superannuation arrangements of today and so of course it still has a direct interest.
Over the years, many fund managers and financial planners have benefited through the ACTU's participation in developing compulsory superannuation. Many of these cant spell 'history'.
"of course it still has a direct interest". That would have to be one of the greatest understatements of all time Hedware!
The ACTU set up "Industry Super" to create a revenue stream for unions in in era of declining membership, and to exert direct pressure on public companies via share ownership. It has been a wildly successful strategy for them. Unions have more money and power now thanks to "Industry Super's" share of compulsory super, than they ever did from voluntary union membership. They are desperate to cling onto it.
It was to do with the Accord and it was one way of stopping the spiralling wages and prices that a number of economies were suffering at the time. A time completely different to today's situation. Basically the ACTU agree to forgo wage increases to break the spiral and put up with rising prices.
Economic history needs to be a mandatory unit for qualifying financial advisors.
Superannuation schemes at that time were rather different to today and were basically exclusive to high wage earners. More economic history needed.
At the time, union membership was not declining. The thought of using superannuation to use share ownership as a leverage was not really pronounced, but you are probably correct in that some in the ACTU did put some thought into the concept.
Union power has declined and not jus because of the decline in membership - employment has changed, services industries have supplanted the traditional industries/businesses, work agreements are individualised, and millennials only join social media. Union power through industry funds is exaggerated except in the minds of a few.
Some of us were there at the time Hedware and know exactly what happened.
The unions agreeing to trade off spiralling wages for superannuation is a completely different issue to the unions becoming active participants and direct beneficiaries of the superannuation system. Compulsory superannuation could have been introduced with a quite different supplier model, such as an extension and refinement to the Commonwealth superannuation system. We could have ended up with a much cheaper and simpler system, which delivered risk free lifetime annuities in retirement rather then the current anxiety provoking schemozzle. Singapore's CPF is an example of the type of model we could have had instead. While it is far from perfect, it is far better than our current mess.
Unfortunately the opportunity was missed because the interests of union officials and their commercial cadres was placed ahead of the interests of union members, which was all placed well ahead of the interests of most Australians.
I agree with your take on the extension of the Commonwealth super scheme and the better outcomes with such an approach. From memory it was Keating who went for the industry/private combination approach.
wonder what ACTU has to lose from this.....
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