Yesterday, the commission released a discussion paper calling for submissions from stakeholders on a range of issues pertaining to trade unions, including ties to the superannuation sector.
“Potential for coercive conduct and conflicts of interest in enterprise bargaining identified in respect of employee benefit funds also exists in respect of superannuation funds,” the discussion paper stated.
“This is because of the institutional links between trade unions and industry superannuation funds.
“Industry superannuation funds pay substantial sums to the unions with which they are associated including directors’ fees, reimbursement of director’s expenses, office rental, advertising expenses and sponsorship.”
Commenting on the discussion paper, FSC boss Sally Loane said the royal commission process demonstrates it is time to “decouple” super from the industrial relations lobby.
“If Australians are forced to save a portion of their salary for 40 to 50 years, they must be allowed to decide who will be the custodian of their money,” Ms Loane said.
“All employees should be able to exercise choice of fund and all employers should be able to choose any MySuper product to be the default fund for their workplace.”
Funky Goose, I am in violent agreement with you on the value added by professional advice. In most cases it was far, far greater than the small increase to the product cost when those fees were built into the product. Many people who have benefited from professional advice funded by product fees would never have paid a separate lump sum fee to get that advice.
Consequently, with the unbundling of advice fees from product, far fewer Australians will benefit from quality advice in the future, even though adviser educational and ethical standards have greatly increased. More Australians make their superannuation and investment decisions now based on misleading PR and advertising.
Of course the primary reason all this happened was to create a new income source to fund the unions and their parliamentary puppets. The consumer protection issue was a smokescreen which could (and has) been addressed by other means.
Paul you seem to assume that the adviser service fee adds no value. How many non advised clients switched to cash after the GFC and have remained there ? The compare the pair ads cannot pick that up.
We here of constant examples of this happening and the Dalbar studies prove that investors are their own worst enemy when it comes to managing their emotions during volatility. The value we have added to our clients portfolios and peace of mind is immeasurable. The instos still don’t get that. They refuse to acknowledge the key role of behavioural finance in financial planning. Do your own maths on the following compare the pair – client stayed invested since 2008. Client switched to cash in 2008.
I notice that CBus promotes itself as a fund that “invests in building projects which create employment opportunities for our members”.
Can anyone explain how this is not a breach of the sole purpose test?
Funky Goose, the reason the union retail funds are focusing on 10 year performance so much now is because most of the non-union retail funds (AMP, Colonial etc) have unbundled the financial advice fees that used to be built into the product. Consequently when you do a true apples to apples comparison, the supposed “performance” advantage the union funds had in the past disappears. They never actually had a performance advantage, just a total cost advantage for clients who didn’t want to pay for bundled advice. If you take the advice fees out of the picture, most of the non-union funds are actually cheaper and better performing than the union funds. But this unbundling of advice fees by the non-union funds only happened in the last 5 years or so. That’s why the unions want to shift the focus back 10 years, when it wasn’t an apples to apples comparison. It has no relevance in a comparison of the modern fund choices available to consumers today.
Melinda the industry funds keep moving the goal posts to suit their performance argument. Since the GFC equities have outperformed leading to retail funds outperforming the industry funds which had benefited from non listed investments ( ie not priced to market ) which the industry funds used to market their returns during the crisis. Now that they are underperforming, they are extending the performance history from 5 years to 10 years to 15 years – whatever it takes to suit their spin.
[quote name=”Ben”]About bloody time! It is also highly questionable to have a major political party which is so closely aligned with one group of superannuation product providers. I hope they look at that issue as well.[/quote]
Do you mean the Labor party and Industry Super or the Liberal Party and the Banks?! Is there any difference?
[quote name=”Phillip”]So the Royal Commission wants to get workers to contribute to the lower performing non-industry funds that provide election donations to the Commissions instigator the Liberal Party. And the RC is in to [i]union[/i] corruption…[/quote]
I would love to know where you get the figures of the non-industry funds being lower
performing? From the ISN perhaps? Just because you say it out loud, it doesn’t mean it is true. And the Royal Commission wants to give people a choice of either option, not take choices away like some sectors are pushing for.
So the Royal Commission wants to get workers to contribute to the lower performing non-industry funds that provide election donations to the Commissions instigator the Liberal Party. And the RC is in to [i]union[/i] corruption…
About bloody time! It is also highly questionable to have a major political party which is so closely aligned with one group of superannuation product providers. I hope they look at that issue as well.
And ISA have the gall to carry on about vertical integration and conflicts of interest in our industry??
Truly sickening.
Agree with Sally Loane, all employees should have access to Choice of Fund. I’ve got the ludicrous situation where husband and wife who have an SMSF both work for Woolworths, but in different divisions governed by different EBAs. The husband has Choice of Fund but the wife must contribute to REST under a deal struck by the Union. No prizes for guessing there is a link between the Union and the Super Fund. Just another form of vertical integration and bias that the Labor Party, CHOICE and ASIC bleat about every day, but not when it comes to their mates in the Union Funds.
If the Industry Super Funds are as good as they say they are, why are they so afraid of competing in an open market?