Why some banks remain in superannuation

Amid the continuing debate over retail versus industry superannuation funds, one of the major bank-owned superannuation players, Westpac’s BT has acknowledged that it paid $25.1 million in dividends to its parent company last financial year.

Labor Party politicians had noted that BT-Westpac ran “for profit” superannuation funds and asked: “To the extent that there are profits, do any dividends get returned to parent entities on the performance of your fund”.

Answering questions on notice from Victorian Labor back-bencher, Dr Daniel Mulino, Westpac-BT acknowledged that where there were surplus profits available over and above regulatory capital requirements and additional internal capital buffers, these would be considered by BT’s boards for approval for distribution via dividend to the parent entity.

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“Performance fees are only payable to external investment managers of certain underlying portfolios and are not one of the fee categories that BT can earn revenue from (i.e. not a source of dividend payment to the parent entity),” the answer said.

“However, strong investment performance within BT’s superannuation funds will likely lead to increased fund inflows, which may impact the level of dividends paid to the parent entity.”

“BT Funds Management Limited and Westpac Securities Administration Limited (in its capacity as trustees of its superannuation funds) have paid $25.1 million in dividends to the parent entity in FY 2020,” the answer said.

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