Shaking up Industry Super Funds
We’ve all seen the ads. As Paul Kelly opines about ‘big things’ growing, serene representatives from various industries shape their hands into two triangles. These are the ads for Industry SuperFunds Australia (ISA), and over the last decade, they have become some of the most trusted entities to manage Australia’s multi-trillion dollar retirement savings.
Another series of ads produced by ISA are those that compare a couple of workers side-by-side and show the value of their savings over time. The result is that the member of the ISA has significantly more money for retirements, and this is something that has ben supported year after year through comparative yields.
Regardless, during the spring parliament sittings, the Federal Government is looking to finalise legislation requiring the boards of all funds to have an independent Chair, and for at least one-third of the members to also be independent.
This model is aimed at removing union influence from the ISAs given their close alignment with unions, and a large presence of union representatives on their boards. Understandably the ISAs are concerned about this, especially given their not-for-profit model has consistently seen better returns (and much less scandal) than the retail providers that are largely owned by the Big Four banks.
So, is there really any point in applying a one-size-fits-all model for the governance of Superannuation funds – especially when the funds most likely to be affected are those that are currently performing the best?
Assistant Treasurer Josh Frykenberg is certainly determined to see this reform through. Public consultation of on the draft legislation closed on Thursday 23 July, so we shouldn’t be too far away from seeing the final product.
If there was one lesson learned from the Global Financial Crisis, it was that there is no such thing as too much transparency in the financial industry. However, whether this fits in with the broader anti-union narrative of the current Government, or is sensible reform that will bring real outcomes for members of all funds remains to be seen.