Shorten ‘favours union monopoly on all funds’
Bill Shorten’s plan to introduce independent trustees to retail superannuation funds run by the big banks is under fire for favouring industry funds and adding a new layer of regulation to the nation’s $2.6 trillion retirement savings system.
The Opposition Leader told The Australian’s Outlook Conference this week that Labor would contemplate forcing for-profit funds to outsource the trusteeship to an independent organisation to help improve their operations and cut back on conflicts of interests between members and shareholders.
He also said regulators would need to help enforce the proposed new rules to lift the “genuine independence” of for-profit funds which have been heavily criticised for their under-performance.
However, Josh Frydenberg was quick to downplay the concept and said Mr Shorten’s plan showed Labor was determined to favour union-backed funds by adding new regulation to for-profit funds.
“In floating new regulations that would apply to retail superannuation funds only, Labor have made clear their real agenda on superannuation — they support a monopoly for union-run industry funds,” the Treasurer said.
“Bill Shorten must clarify for the Australian people whether he thinks monopoly union control of their compulsory savings would be his ambition as prime minister.
“The government has a number of bills in front of parliament that puts members’ interest first such as strengthening APRA’s powers to hold under-performing funds to account irrespective of what sector they are from, and enhancing governance by ensuring there are more independent directors across all superannuation funds whether retail or industry.”
Association of Superannuation Funds Australia chief executive Martin Fahey said the industry believed funds being forced to outsource to independent trusteeship would not be an effective reform.
Dr Fahey said he believed that rather than being forced to have independent trustees, stricter rules around managing conflicts of interest were needed.
ASFA has campaigned for clearer demarcations in governance structures of trustee boards and related parties.
“The retail funds are already required to have 50 per cent of their directors being independent and there’s no doubt that they play an important role,” he said.
“So do the executive directors sitting on that board. Our preference is that funds not be mandated to adhere to a particular structure — we don’t think that is the solution.”
Australian Institute of Superannuation Trustees chief executive Eva Scheerlinck said the structure of bank-run funds was expected to change following the royal commission.
The AIST is the peak body for the $700 billion not-for-profit funds, and covers industry, public sector and company staff funds.
‘Retail funds are already required to have 50 per cent of their directors being independent’ MARTIN FAHEY ASFA