We have all seen the (expensive) advertisments on television stating how the members are the prime consideration of industry funds. In addition the Industry Super Funds website states they “are run only to benefit members”.
A $9 billion merger between Vision Super and Equipsuper collapsed after union-supported trustees insisted the board scrap elections and take-up union “nominated” positions instead. You can read more about this here. This decision seems to be based on union power control rather than any consideration of the benefit to members.
The MTAA Super Fund benefited from two Australian Manufacturing Workers Union (AMWU) officials who brokered a deal which gave MTAA access to several hundred thousand new employees. This was at a time when the MTAA was ranked 48th out of 49 funds in performance over the previous year. Not only did the AMWU officials not disclose that they were trustees of the super fund when they brokered the deal, but from the performance of MTAA you’d have to say they didn’t do fair due diligence. Read more here.
Sticking with the MTAA, this artcle talks about how their asset allocation consultant, Access Capital Advisers, has been accused of conflicts of interest. You see they advise on asset allocation and then earn management fees from the assets they introduce. I wonder if the MTAA members know that? t’s no wonder Industry Funds limit their “No commissions” statement to just financial planners. And I wonder what the term is for what happened at the Meat Industry Employees Super Fund where a union official on the fund’s board received tens of thousands of dollars from Austcorp when the fund had invested $30 million in the company? Is it a commission, a good old fashioned backhander or something else entirley? Whatever the term, it doesn’t look like it was done to benefit the fund members.
At the heart of these issues is a lack of transparency in most Industry Funds. The Institute of Public Affairs produced a report titled Keeping Super Safe which called for new laws that will force APRA regulated supr funds to increase disclosure and transparency. The report detailed that Industry Funds “have spun off a web of interlocking companies and trusts” and that the little information which is disclosed is “relatively superficial”.
As this article from The Australian states, “if disclosure is poor the risk of misappropriation is high”. Members simply do not know basic facts which they should be entitled to know. Elementary facts like how much they are paying the predominantly union appointed trustees and whether conflicts of interest exist. Instead the members have to rely on a cheap slogan stating the funds “are run only to benefit the members” and an inept Labor government whose main concern appears to keep the status quo.