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Industry funds lobby to block governance changes
Industry Super Australia (ISA) has signalled it will be strongly lobbying parliamentarians to block the Government's legislation changing governance arrangements for superannuation funds including one-third independent directors and an independent chairman.
The ISA signalled its intention in the immediate aftermath of the Assistant Treasurer, Josh Frydenberg, introducing the legislation to the House of Representatives yesterday.
While the Government will have little trouble navigating the legislation through the lower house, there are no guarantees with respect to the Senate where both the Federal Opposition and the Greens have signalled their scepticism over the need for the governance changes.
Reacting to the introduction of the legislation, ISA urged the Parliament to focus on getting superannuation to deliver more to members and to investment opportunities that can drive economic growth rather than "pursuing governance changes [that] will force industry super funds and other not-for-profit funds to adopt the board structure of underperforming funds run by the banks in the ‘for-profit' sector."
ISA chief executive, David Whiteley, said it was inconceivable that changing the governance of industry super funds was priority for the government or the country.
"The proposed changes introduced into Parliament today could leave five million super fund members in the not-for-profit sector worse off," he said.
"These changes — long promoted by the banks — would impose a radical and unnecessary disruption to funds without a shred of evidence of improved member returns. They would also add to a series of enacted and proposed changes that represent the most significant shake up of universal super since 1992."
"Industry super funds, and other not-for-profits, are intentionally different to bank-owned funds, with boards that are completely member-focused and which have delivered better returns year after year while remaining immune to financial scandals that have engulfed the banks," he said.
"Changing the trustee system to effectively mimic the bank funds will inevitably and over time change the culture, investment philosophy and asset allocation of not-for-profit funds, resulting in poorer returns on retirement savings for millions of people."
"Industry Super Australia urges the all parliamentarians to reject these bank-designed laws and protect the interests of super fund members," Whiteley said.
His comments stood in stark contrast to those of Financial Services Council chief executive, Sally Loane, who welcomed the legislation, saying it would result in greater consumer protection and lower fees.
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