Unions call for Frydenberg to block CFS sale

The union peak body has told the Treasurer that selling pensions giant Colonial First State to a US private equity group would “cast an ominous shadow over the future of super”.

The Australian Council of Trade Unions (ACTU) has written a letter to Treasurer Josh Frydenberg expressing concern over the sale, which if approved will see Texas private equity firm Kohlberg Kravis Roberts (KKR) purchase a 55 per cent stake in Colonial First State for $1.7 billion

KKR would gain control of the retirement savings of more than 700,000 members, with $135 billion in managed assets.

When it declared the sale last year, CBA forecast a wrap-up date within the first half of 2021 – subject to APRA and Foreign Investment Review Board approvals.


But Scott Connolly, assistant secretary for the ACTU, has told Mr Frydenberg that it is “essential that the Australian government blocks the sale” and “sets an example that Australian retirement savings vehicles are not the playthings of corporate raiders”. 

“The prospect of the acquisition of Colonial First State by KKR, however, casts an ominous shadow over the future of superannuation in Australia and would be an absolute rejection of the banking royal commission’s final report,” Mr Connolly’s letter stated.

The state of Kentucky launched a court action against KKR and Blackstone last year, claiming the pair had charged excessive fees and generated insufficient returns when operating pension products for government workers.

Mr Connolly’s letter has referenced the lawsuit, commenting “working Australians can take no comfort that KKR would behave any differently here should they get their hands on workers’ retirement savings through this deal”. 

“Despite the government’s ostensible ambitions of reducing fees and increasing transparency in superannuation, the sale of Colonial First State portends to a dark future,” it read. 

“That profit is permitted in the custodianship of workers’ retirement savings is anathema to the founding principles of universal, compulsory superannuation and incoherent with the responsibilities of fiduciaries.”

But the ACTU has also raised concerns around the government’s proposed Your Future, Your Super reforms, with Mr Connolly writing they will “obscure underperformance …. And astoundingly deem profits in the best interests of members”. The union body has claimed the legislative reforms will make the superannuation market more appealing for foreign investors.

“Foreign-based corporate raiders with chequered pasts buying workers’ retirement savings with the intent to extract as much profit as possible is an appalling future for the stewardship of workers’ money,” the letter said.

It also insisted blocking the sale would be key as Westpac is rumoured to have super and investments subsidiary BT on the market.

Rival Australian banking and wealth player AMP recently confirmed it would be looking to sell a majority stake in AMP Capital’s private markets business to US group Ares Management Corporation. AMP is currently shopping around the asset manager’s fixed-income and global business for other buyers.

Unions call for Frydenberg to block CFS sale
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