In a report titled Rivers of Gold released late last week, the libertarian think-tank exposed the monetary links between a number of industry superannuation funds and the the labour movement – a move its authors say may not be in the interests of members.
The report states that industry fund directors’ fees are being used to financially support union activity, as a large number of fund directors are also trade union officials.
“Industry super funds are being used as a vehicle to transfer millions of dollars from hard-working members to the trade union movement,” said report co-author and IPA policy director Simon Breheny.
While many industry fund members are blue collar and non-professional sector workers, Mr Breheny points out that just one in 10 Australians are now a member of a trade union, questioning whether the significant spend of member funds is justified.
The three largest recipients of fees from the industry funds are the Construction, Forestry, Mining and Energy Union (CFMEU), United Voice and the peak body Australian Council of Trade Unions (ACTU), which received $2.8 million, $2.3 million and $2.05 million respectively.
The Finance Sector Union was the organisation with the lowest level of industry fund financial support at $1.7 million.
The funding received by trade unions vastly exceeded the payment of directors fees to employer and industry groups, which received a total of $2.07 million combined.
The IPA has proposed that the payments between industry funds and trade unions cease.
“Significant efforts should be made to stop members’ funds being funnelled from industry funds to the union movement,” Mr Breheny said.
The union’s honey pot is starting to get very,very sticky indeed.
There is not a chance in the world this incredible story of effectively money laundering, will ever make it into an Adele Ferguson article in The Age , ABC News story, 4 Corners or Q&A program.
Yes, their researchers and fact checkers will immediately see the name IPA and realise what a beat up this article is. The last I heard the ABC and Farifax are still the most respected source of independent journalism in the country. May want to try the Murdoch rags as Rupert isn’t a big fan of unions!
Can someone please make sure this gets into mainstream media?
Surely this means that union funds are not SIS compliant. Which means that the superannuation tax benefits provided to members of these funds are at risk. Now that this is out in the open, it probably also means any financial planner who recommends a client join or retain a union fund is also at risk. It won’t be surprising to see risk averse AFSLs recommending their advisers get clients out of union funds ASAP. Nor would it be surprising to see PI insurers place an exclusion or loading on the use of union super funds.
This report is a hatchet job by the right wing, libertarian IPA which is supported by the Corporate world (ie banks) and the Liberal party. No regulatory body has ever accused industry funds of not being SIS compliant especially as the equal representation and not for profit model of industry funds has seen vastly superior returns to members than retail funds. I suggest the IPA turn their focus on the banks and analyse whether their board members have the interest of their members retirements above that of making returns for their shareholders. Very unlikely considering they are a profit making business and the interests of their shareholders need to come before those of their members (big conflict of interest).
‘Retail funds!’ Exactly what the heck is a ‘retail fund’? My ‘advised clients’ returns are knocking long term ‘In-dust-ry Funds’ returns for six. Net of all fees including advice.
and what is an ‘industry fund’? A retail fund is a fund owned by a ‘for profit’ organisation like a bank, fund manager etc. It is a nicer way of saying ‘for profit’ but I will use that term in the future if you wish…..
Can anyone tell me how much Union Super funds gave to the FPA last year ? How much did the Banks give to the FPA last year ?
“Let he who is without guilt cast the first stone” – Bible
Instead of sitting in judgement of others, perhaps all superannuation fund participants should be looking in the mirror.
Transparency should be mandatory for all.
The bible also states that the self righteous will be judged more severely. We don’t need to wait for judgement day for the industry fund movement to be held to account for their misinformation used ton sell their product
Industry funds will be exposed in time for not being the holy option. Their commercials are seriously misleading and the hidden cost of running industry funds need to be exposed by someone.
The bigger issue the advice industry will face in the future is the “fee for service” con.
That will be impossible to justify for most advisors and seen for what it really is in due course IE trail comission by stealth.
Steven I suggest you work on your client value proposition or get a salaried role where you don’t have to run a business and manage costs and take responsibility for client outcomes.
holidays homes in unlisted property trusts, Range Rovers in the car park, 10’s of millions of dollars in sponsorship syphoned off before hitting the members trust account, why does this come as a surprise.
But its all for members, remember…….
Is anybody even remotely surprised by this? Im sure sporting club sponsorship isn’t within the charter either . i would love to see another “compare the Pair” campaign with the 3rd escalator heading off to Trades Hall LOL
I am no admirer of the IPA, funded as they are by the big end of town & the HR Nicholls Society. BUT, on this one, they are spot on. It galls me to see industry funds sponsoring NRL teams. I also thought the Trade Union RC was a joke but it did reveal the $75k paid to TWU officials from TWU super in WA for “liaison”. BTW, will the IPA count the donations from the banks to the Kelly O’Dwyer re-election, Refer AEC returns!! The whole thing makes me reach for the stematil !!!
How are these payments, as well as advertising /sponsorship expenses ,incorporated into their investment performance figures. Surely focus must now turn to the legitimacy of the marketing of their investment performance (which they continuously use to justify why their governance and journalists pick up and assume are correct ) and the establishment of a standardised methodology for performance calculations that are verified by an independent third party.
Not sure if you realise but this has recently been established and standardised across all industry and super funds in general and guess what industry funds are still way cheaper. Advertising/ marketing is accounted for in most funds Administration fee which still .. guess what… way cheaper than retail funds. Are you saying John that banks don’t advertise or shouldn’t be allowed to? If it wasn’t for banks aggressive marketing (predominantly through their own FPs) industry funds wouldn’t need to spend as much on this as an efficient market would see customers flock to the lower fee/better performing industry funds.
Well, not sure if you realise that RG 97 has been postponed because of last minute lobbying by the industry fund sector. Therefore, a true comparison of ALL the costs of running an industry fund against any other fund hasn’t happened yet for people to understand. Either way, under the legislated best interest duties, financial advisers are now required to provide advice to clients across all areas impacting them, including their incomes & tax, debts, risk management, insurances, retirement, estate planning and investments. Significant financial value is added to clients by financial advisers understanding clients’ needs (not offering the cheapest investment), and implementing/reviewing the appropriate strategies for their benefit over time. Once industry funds are fully transparent and start delivering better investment options (not just claiming lower fees is better… as you get what you pay for), then good financial advisers may start recommending them more. Industry funds need to end the charade, it’s wearing thin and the report by the Institute of Public Affairs shows that people can see through it!
lets have a royal commission here as well.
we already have one
The IPA a “libertarian think-tank”? More like another RWNJ non-thinking tank!
Did they reveal how much money was siphoned off to bank controlled retail super funds and their performance?
C’mon IFA this isn’t news it’s just propaganda by an irrelevant union (known as IPA – will they reveal their source of income too?) masquerading as a think-tank.
IPA is funded by member contributions
I bet we don’t see an ” unbiased ” ABC, 4 Corners investigative report on this little topic in the near future!
Not likely. Ian Verrender has already started spruiking the union PR lines on the ABC.
Ah yes….the ABC………Always Biased Commentary
Yep, instant fear drives instant response and as we well know, the street fighter spirit of a staunch unionist will defend and fight to the death in the name of their comrades, despite whether the basis of their fight is right,wrong or indifferent….let’s just call it what it is and that is pack mentality.
Add this to the Royal Commission…
Industry Funds are being included