Sally Loane

The Financial Services Council welcomes The Trade Union Royal Commission Discussion Paper – Options for Law Reform which identifies inherent conflicts in the superannuation system.

The discussion paper states: “…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. This is because of the institutional links between trade unions and industry superannuation funds. In most cases, half the members of the board of an industry superannuation fund are nominated by unions and the other half nominated by employers. 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.”

Sally Loane, CEO of the Financial Services Council said: “Superannuation must be decoupled from the industrial relations system to avoid these conflicts and to open up the superannuation market to competition and choice.”

“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.”

“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,” Ms Loane said.

“In the Financial System Inquiry Report, David Murray put choice and competition at the centre of his recommendations on superannuation, strongly endorsing the principle of a consumer’s right to choose their fund in a compulsory system and that this must be protected by law.”

“This is an important reform, as many people covered by enterprise agreements and awards must use the fund chosen for them regardless of whether or not they are a member of a trade union.”

“The Fair Work Commission selection process prevents access by some of the cheapest MySuper default funds to the market.  Allowing all MySuper products to compete for default fund status will deliver lower fees.”

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