Senator proposes regulation to shut down superannuation lobby groups to save fees

Senator Andrew Bragg has been pushing for major changes to the superannuation system.

Superannuation industry lobby groups could be shut down under new legislation aiming to reduce retirement account fees and improve returns, with Liberal senator Andrew Bragg suggesting regulations could be introduced forcing representative bodies to merge.

The federal government’s Your Future Your Super changes could be used to force consolidation among industry superannuation lobby groups in a bid to cut down on the expenses of the nation’s industry super funds. One feature of the legislation could give the Treasurer the power to block funds from making spending and investment decisions the government does not like.

The $3 trillion superannuation industry charges about $30 billion a year in fees and Senator Bragg estimates the lobbying arm of these groups employs about 100 people and spends $50 million.

“[Do] we really need to cough up for four huge lobby groups,” asked Senator Bragg, who formerly worked at the Financial Services Council and the Business Council of Australia. He clarified he was referring to the Australian Institute of Superannuation Trustees, Industry Super Australia, the FSC (whose members include super funds but also other finance-related businesses) and the Association of Superannuation Funds Australia.

“All these groups do is tell us how good super is, even when it isn’t ... We ought to drive a consolidation of these groups,” he said. “It’s a compulsory system funding a multitude of groups all doing the same thing. This could be reigned in through regulatory measures if a softly, softly approach fails.”

The relationship between Coalition MPs and industry super funds has deteriorated over the past 12 months, with Industry Super Australia labelling Senator Bragg and other MPs as “hypocrites” for getting 15.4 per cent super while opposing a legislated rise in the mandatory super guarantee and using a major free-to-air advertising campaign to warn off government “meddling” in the industry.

Industry Super Australia chief executive Bernie Dean was scathing about his comments, saying the “intent is clear”.

“He wants to use these laws to silence those trying to protect members’ interests, as he cuts workers’ super and tries to funnel their retirement savings into the coffers of his former paymasters at the big banks,” Mr Dean said.

Senator Bragg is a member of the Senate Economics Legislation Committee, which held the first of two consecutive days of public hearings about the superannuation Bill on Wednesday.

FSC deputy chief executive Blake Briggs, who appeared at the hearing, said rationalisation among some of the lobby groups could help reduce costs for the sector.

“The new best financial interest duty will require trustees to confirm that they have received value for money from their industry associations,” he said, adding he “has no concerns demonstrating the value we deliver our member companies”. The FSC receives about $6 million a year in funding.

AIST’s total membership fees for 2020 totalled $1.67 million, with total revenue worth $7 million. AIST chief executive Eva Scheerlinck said the group helped profit-to-member funds stay abreast of policy and regulatory changes and was “cost-effective” and “high value”.

Several experts, including the superannuation funds and lobbyists, told the committee the additional powers and the range of ways they could be used to limit decisions made by the funds could damage member returns.

Senator Bragg previously said publishing outlet The New Daily, which is backed by Industry Super Holdings, is the “sort of largesse [that] will be illegal” if the bill passes the Senate.

A submission from employer group Ai Group said it “makes no sense that trustees could be required to go to extraordinary lengths to ensure they are in a position to prove their actions are in the best financial interests of members while at the same time creating a power for these actions to be circumvented by regulations”.

QSuper, which has 600,000 members, recommended dropping the provision allowing additional regulations to block payments and investments or to put parameters in place specifying how the powers might be used.

“The provision may call such long-term investments into question for fear that at some stage decisions may be reversed by regulation with no consultation,” the submission said. “Our concern is that the provision casts doubt over whether long-term decisions of trustees, and the commitment of material sums of members’ monies, will stand in the future.”

Andrew Bragg is a Liberal Senator for NSW

Become a Subscriber
Important News Delivered
Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.
By signing up you agree to our Terms & Conditions