SUPER GOUGE
Huge salaries for senior executives
AUSTRALIANS are paying more in superannuation fees every year than we are collectively spending “on power bills”, in a gouge that is lining the coffers of fund bosses. A News Corp investigation into the multibillion-dollar industry has found that while savings have more than doubled in a decade, the profits being creamed off hardworking mum and dad members’ investments are eye-watering. It can also be revealed some board members have been in their positions for almost three decades — far longer than the 12year tenures corporate Australia typically mandates, to avoid fatigue and prevent tunnel vision. New regulator data shows the amount of money sitting in super climbed from $1.23 trillion in mid-2010 to $2.86 trillion today, swelling retirement fund fees. As the long-running battle involving industry super funds, retail super funds and political parties flares up again, insiders say there are a “lot of halftruths and misinformation” surrounding the sector.
Not-for-profit industry superannuation funds dominate the top of the super tree, and several of their CEOs and chief investment officers are pocketing $1m-plus salaries, while the funds donate millions of dollars to unions.
The funds’ latest annual reports show the highestearning super CEO for 2018-19 was Hostplus’s David Elia, who was paid $1.19m, while AustralianSuper boss Ian Silk earned $1.06m and QSuper CEO Michael Pennisi was paid $1.02m.
Chief investment officers – responsible for managing members’ portfolios – were paid even more, with UniSuper CIO John Pearce’s salary reaching $1.73m, Australian-Super’s Mark Delaney earning $1.63m and First State Super’s Damian Graham receiving $1.33m.
Retail super fund profits and pay details are murkier, often buried within the financial reports of parent businesses and only showing a portion of the executives’ total remuneration. And union links to the top of the super sector are stronger than ever – many board members have ties to some of the most powerful unions in the nation, including the ACTU.
Industry funds have a longstanding model of board composition – 50 per cent of directors are nominated by a union, the other half nominated by an employer group.
Liberal senator Andrew Bragg, author of Bad Egg:
How to Fix Super, said there were too many highly paid super fund bosses. He slammed the super system and said it was “not working” by keeping Australians off the pension.
Senator Bragg said only 30 per cent of Australians at retirement age were completely self-funded despite the super system being in place for nearly three decades.
“There’s been mergers that have fallen over because they can’t work out who is going to go on boards, which means there’s double the directors fees, union conferences and sponsorships,” he said.
Senator Bragg said some of those on super fund boards had been on there far too
long. “I don’t think people should be on boards for 28 years – that’s ridiculous,” he said. APRA said there would be “limited circumstances where someone can be on a board for a period extending more than 12 years would be appropriate”.
Australians shell out $32bn in fees every year, which Senator Bragg said was “more than we spend on power bills”.
Industry Super Australia – the lobby group for industry funds – is a prolific advertiser, urging people to join its funds.
In the 2019-20 financial year its total revenue was $23m, most of which was spent on marketing.
But Association of Superannuation Funds of Australia CEO Dr Martin Fahy defended the system, saying it’s “intended purpose is to provide adequate income for Australians in retirement and … a dignified standard of living”.
“If today’s young people are to avoid ending up on the age pension, every single dollar contributed to superannuation counts,” he said.
Wealth for Life Financial Planning principal Rex Whitford said there had been complaints by some funds about people withdrawing up to $20,000 through the federal government’s early release scheme. “But it’s the member’s money – it’s not the fund’s money,” he said.
He said the growing size of big super funds gave them more control over boards of companies in which they had become large shareholders.