Keep Unions out of super funds

 

The largest membership group of Unions are in the Public Sector who do not use Union Super Funds. 
They have their own in the Future Fund which gets the best returns . 
Why can't we all..

Keep unions out of superannuation funds

The industry superannuation model is in dire need of reform. The scandals that arise because of the conflicts created by union involvement in the financial services industry must be dealt with urgently. Super governance legislation being debated in Parliament this week enforces at least one-third independent directors on superannuation funds. This is an important step in the right direction.

Superannuation funds under management in Australia total more than $2 trillion. Funds fall into one of five categories: retail, corporate, industry, public sector and self-managed. Industry super funds have a unique governance structure. Industry fund boards are split between employer representatives and employee representatives.

The "equal representation" model is explicitly provided for under the Superannuation Industry (Supervision) Act 1993. A significant problem with this model is that trade unions are taken as proxies for employees. In 1992, when compulsory superannuation was introduced in Australia, that assumption made more sense than it does in 2015.

The Superannuation Guarantee (Administration) Act 1992 was given royal assent on August 21, 1992. Australian Bureau of Statistics data show union membership has declined ever since. In August 1992, 43 per cent of Australian employees were members of a trade union. The latest figures on trade union membership show a sharp decline in that figure. On the latest figures just 17 per cent of workers are members of a union – the lowest in recorded history. This steady decline in union membership in Australia undermines the case for trade union officials to be appointed to the boards of industry super funds.

CONFLICT OF INTEREST 

This quaint governance structure also creates conflict of interest for trade union board appointees. In simple terms, trade union officials do not share interests with fund holders.

This reality has led to serious cases of maladministration.

The Health Services Union has had a bad run in recent years. In one of the more recent scandals to befall industry super, in August the HSU super fund, HESTA, placed political activism before the financial interests of its funds members. On August 18, HESTA announced that it would divest from Transfield Services because the company was in the business of running regional processing centres on Nauru and Manus Island. The company's lucrative detention centre contracts, worth $1.2 billion, help it to achieve healthy returns to shareholders – which would be a relevant consideration if the fund was being run as a financial services firm rather than a trade union plaything.

IFM Investors (a fund manager wholly owned by industry super funds) was rocked by a secret report earlier in 2015 that blamed $700 million losses in its wholly owned subsidiary, Pacific Hydro, on failings in corporate governance. The heavy losses reduced returns to members of the fund to a paltry 1.3 per cent for the 12 months to June 2015, which was well below the average 10.1 per cent average growth for infrastructure portfolios over the same period.

DONATION FROM SUPER FUND

And earlier in 2015, the trade union royal commission uncovered evidence that a slush fund had been created for Bill Shorten's campaign to become leader of the ALP. Among a series of revelations, it was demonstrated that the largest donation to the fund had been received from the Labour Union Co-operative Retirement Fund, an industry super fund.

Institutional links between trade unions and industry super are inappropriate, and have contributed to serious cases of mismanagement.

This relationship must be addressed so that employees can invest in their retirement with confidence. Parliament should pass the federal government's superannuation governance reforms, which help take the industry in the right direction.

Simon Breheny is director of the Legal Rights Project at the Institute of Public Affairs

 



Read more: http://www.afr.com/opinion/keep-unions-out-of-superannuation-funds-20151201-glchn9#ixzz3t8FXsfiW 
Follow us: @FinancialReview on Twitter | financialreview on Facebook

FirstPrev12(page 2/2)
16 comments

I am not going to enter this argument but to me whatever has been said here there to me to be proof is in the pudding.

 

Whatever goes on in the industry funds is that they continually out perform the commercial super funds. And this is a established fact. True there may be a minority that may be suspect but whey yay. Just look at what the banks have been doing.

 

Thanks for that micha.

Just in case there may be some who are not using the ATO as a sauce of info. I find their regular emails of value, often relating to changes they may be planning.

FirstPrev12(page 2/2)
16 comments



To make a comment, please register or login

Preview your comment