Where two big industry funds spent their money

Two of Australia’s largest industry funds have confirmed spending millions of dollars on advertising, and marketing with AustralianSuper revealing how much it spent on its Qantas Frequent Flyer membership recruitment effort.

The AustralianSuper Qantas Frequent Flyer campaign cost the big industry fund $732,050 to develop and implement with respect to 2019, $624,356 in broadcasting and publishing costs and delivered 14,029 online applications which resulted in 13,801 contribution members.

This equates to the Frequent Flyer program having generated new members at a cost of around $98 a time.

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This compares with AustralianSuper’s confirmation that the same campaign in the current financial year cost $248,736 to develop and implement, $239,468 in broadcasting and publishing costs and generated 5,936 online applications resulting in 3,874 contributing members as at 23 October, this year.

The AustralianSuper data, revealed as a result of questions on notice from the House of Representatives Standing Committee on Economics also revealed the extent of the superannuation fund’s multi-million advertising spend over the past five years starting at just over $11 million in the 2016 financial and rising to just under $19 million last financial year.

It also noted that in each of those years, AustralianSuper had made contributions to Industry Super Australia (ISA) joint marketing campaigns starting at around $3.5 million in 2016 and rising to $5.1 million last financial year.

This compares with the advertising and marketing efforts of big building industry fund, Cbus which revealed that in broadcasting and publication costs alone it had spent over $7.7 million in the 2015 financial year rising to nearly $14 million in the 2019 financial year.

Cbus also revealed that it had consistently spent more than $3 million a year on ISA just marketing campaigns.

The fund also revealed what it had spent on corporate boxes and venue hire, noting that it was the naming rights sponsor of the Gold Coast’s Robina Stadium and that following amendments to section 68A of the Superannuation Industry (Supervision) Act on 5 April, this year, and the introduction of Regulatory Guide 68A “the corporate box is not used for entertaining employers or prospective employers”.

Hostplus, the industry superannuation fund which came to note during the Royal Commission over its expenditure on corporate hospitality revealed that it had spent between $18.3 million in FY15 to $21.6 million in FY18.

In similar fashion to Cbus and AustralianSuper it revealed it had apportioned more than $3 million a year to ISA joint marketing campaigns.

HostPlus said it had not used corporate boxes at sporting events over the last five years but had previously entertained employers, industry partners and stakeholders, through corporate hospitality at sporting venues through its sponsorship arrangements.

“Through these sponsorship benefits Hostplus can utilise tickets and food and beverage packages at sporting events, but these do not include the use of corporate boxes,” it said. “During FY15 to FY19, Hostplus purchased ticket packages, including food and beverage, for the specific use of corporate hospitality at the Australian Tennis Open.”




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Seems to me that if the Industry Funds are permitted to engage in marketing campaigns for new members, effectively paying them to join (is this a bribe?), plus use other members funds to pay for the advice of other members (with no ability for those members to opt out of those fees) then their monopoly arrangement for default super should end. The Melbourne Super Club just want it both ways. Enough is enough.

So what benefits do members get from this spending?

The 'war' is definitely over. To the victor goes the spoils, including corporate boxes, sponsorship, excessive advertising expenses, River Fire, huge paychecks to directors / board members etc etc etc.....meanwhile the Financial Planning Industry is being decimated by legislation that does not assist anyone, apart from ISFs. I tip my hat to Labor and the Unions.....well played.

We don't pay commissions to financial advisers has new context.

Surprise Surprise Surprise.

I must have missed that paragraph in the rules that everybody else needs to comply with. Possibly an oversight by APRA, ASIC, Auditors.

They should have to prove how this doesn't breach Sole purpose test.... and also how this money spent is "all profits go are only for benefit members" if anything is statement is misleading

Absolutely nothing to see here ASIC. No breaches, no misuse of client funds, no fee for no service, nothing. Mr Shipton, remind us again, you said that you treat union and retail funds the same right?

The more pertinent question would be how many of those new members are still members and how many exited as soon as the points landed in their QF account. That would be a better gauge of the success of the campaign.

That was me - contributed my $350, got the points and then rolled over pretty much the next day. Too easy for someone trying to up their points for future upgrades etc.
Now I'm just waiting for other super funds to try the same dodgy think so I can gather some more points......

That was me - contributed my $350, got the points and then rolled over pretty much the next day. Too easy for someone trying to up their points for future upgrades etc.
Now I'm just waiting for other super funds to try the same dodgy think so I can gather some more points......

They won’t be sticky though

For every new member signing up for the Qantas Frequent Flyer points it required a minimum contribution of $350.
As there were 13,801 contribution members, even at the minimum amount of $350, it equates to $4,830,350 in new contributions.
So, AustralianSuper spent $1,356,406 in development and publishing costs and reaped at least nearly $5Mill in contributions from members who joined the fund with the incentive of receiving the 20,000 points.
If these new members were advised to consolidate other superannuation monies via the IntraFund advice process , then the level of contributions into AustralianSuper would be significantly more than the initial $5Mill.
So, the new QFFP members spent at least $350 plus the $98 in expenses that AustralianSuper committed to the process. Does that mean the cost to these new members was $448 ??
The expenditure of members monies by these funds for promotional and corporate hospitality is out of control.
On Wednesday 27th March this year, the APRA deputy chair Helen Rowell said the prudential regulator will review the sole purpose test.
She said the aim of the review was to clarify the law and identify potential breaches.
She said the corporate watchdog would also be called in where compliance with the test has been called into question.
How many people believe that ASIC will investigate the strict adherence to the sole purpose test by their very own recently appointed employee default superannuation fund??
Interestingly, following Helen Rowell's announcement regarding the review of the sole purpose test, Industry Super Australia chief Bernie Dean disagreed that the sole purpose test was ambiguous and was quoted as saying it was
"crystal clear ".
It's crystal clear alright.

Seems to me that the moment any one person admits that they joined Australian Super primarily to get a flyer points boost, then the Trustees of the Fund have a serious problem with meeting The Sole Purpose test. Then in the spirit of all in one, all of the members will suffer from the penalties imposed on the Fund. It only needs one whistle blower to say I joined for the points......

You mean like all the people commenting on the OzBargain website when this "deal" was posted?

Just search "20,000 Qantas Points for Joining Australian Super" on the OzBargain website if my link doesn't get published.

https://www.ozbargain.com.au/node/455860

It also needs a regulator willing to enforce the law against union funds. So it will never happen. But if a retail fund tried the same thing...

That's me I joined got the points and a month later rolled my money out. Got a free flight to Sydney out of it. Pretty sure there were a lot of advisers doing this and the regulator won't even care. Pretty sure also if you can falsely advertise that the only cost to run the fund is $1.50 you can do anything you like and the regulator is not going to look at it.

Why does a new member have to contribute $350 in order to get the points if it cost AustralianSuper $98 per new member ?
I assume Qantas on sold the availability of the 20,000 points per new member to AustralianSuper at a cost ??
If so, how much was that cost ?

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