Trade unions played a pivotal role in the creation of compulsory superannuation and deserve to be part of its future, says AIST.
It seems that climate change and superannuation policy have a lot more in common than the need to take a long-term view of one of Australia’s great economic reforms.
Just as the climate debate has often been driven by ideology rather than science, recent discussions about reforming Australia’s $1.4 trillion superannuation industry has become mired in misinformation, commercial self-interest and anti-union prejudice.
Vitriol focuses on the role of employee representatives in compulsory super – specifically, union appointees on the boards of not-for-profit super funds – and industry funds are often labelled as “union-controlled”.
This is wrong. By law, industry funds must have equal numbers of employer and employee (union) directors on their boards.
And those directors must act in the interests of their members, not those of organisations seeking to profit from the super system. And that’s what they do. The skills of not-for-profit boards includes those you would expect on any business board.
Curiously, the calls from banks and retail funds for more competition (read ‘more profit’) in our super system are being given more airplay. But where is the evidence that the unions’ role in super has been anything but positive for the nearly two thirds of Australian workers who belong to not-for-profit super funds with union representatives on their boards?
Over the past three years, there have been many reform proposals for the super sector. This year, the superannuation regulator APRA will introduce new industry standards. Earlier this month, the Minister for Superannuation, Bill Shorten, announced a Productivity Commission inquiry into how default super funds are selected as part of industrial awards.
As the peak body for the not-for profit sector, AIST supports the intent of all 12 of the new APRA standards. We’ve long championed high standards of governance and have led the debate on raising the bar across the entire industry.
AIST has welcomed the Productivity Commission Review because we are confident that our default funds will remain the best place for members to build their retirement savings. While virtually all employees have the right to choose their own super fund, default funds play a vital role in providing a safety net for the deferred wages of an estimated 80 per cent of workers who do not exercise choice.
Robust debate about super is to be encouraged and should be wellinformed. Super funds with equal representation on their boards have outperformed retail funds by more than 2 per cent a year over five, seven and 10 years. Moreover, since the beginning of compulsory super, there have been no major fund collapses or misappropriation of members’ money in the not-for-profit super sector.