by Sally Patten 7 Sept 2017 Australian Financial Review
Industry superannuation funds spent more than $37 million last year to promote themselves in the media, 54 per cent more than their retail super scheme rivals.
Figures compiled for The Australian Financial Review using data from AQX Standard Fusion show that the bulk of the difference in media spend was accounted for by the $9.4 million spent by a group of 15 union and employer-backed retirement schemes on general branding campaigns, including ‘compare the pair’ and the controversial fox and henhouse advertisements.
The $9.4 million spent by Industry Super Australia in the 12 months to June 30 was 34 per cent higher than the previous year, with sources estimating that ISA has spent about $3 million so far buying slots for the fox and henhouse ads.
The contentious ads, which have been slammed by the bank-owned super funds, position banks as predatory foxes about to pounce on a young girl’s pet chickens, while the government is portrayed as a man who opens the door to the chicken coop, letting the foxes attack.
The media spend figures exclude the cost of making the advertisements, which one industry expert estimated to be about $500,000 in the case of ‘compare the pair’ ads and $700,000 for the fox and henhouse campaign.
The gap in the media expenditure figures emerges just days after the securities watchdog chastised an online publication owned by industry super funds for failing to “give the full picture” of a proposal by the Australian Securities and Investments Commission to force super funds to disclose their investment fees.
ISA declined to comment on the accuracy of the figures, but said the combined advertising budget was a cost-effective way to convey the benefits of being in an industry super fund to members who were largely disinterested in their retirement savings.
“We inform and educate members about the considerable benefits of industry super fund membership,” said ISA chief David Whiteley.
The bulk of contributions that flow to industry funds are from members who are defaulted into a fund because it is nominated in an industrial award or workplace agreement.
The biggest spending industry fund last year was Cbus, which forked out $6.1 million on advertising in the 12 months to June, up from $4 million in 2015-16. Cbus acting chief executive Trish Donahue said that decisions to advertise were “made rigorously and in members’ best interests,” adding that the fund’s size and performance was partly due to its ability to retain members through marketing activities.
AMP was the biggest retail media spender last year, forking out $8.7 million, although it is understood that the campaigns covered the wealth company’s suite of products and services, including banking, financial advice, life insurance, investments and super.
AustralianSuper, the country’s biggest industry fund, which like Cbus is a member of ISA, spent $4.5 million last year, down from $6.5 million the year before.
“Advertising is important to retain and communicate with members, grow scale of the business in a bid to keep costs down and improve investment performance,” a spokesperson said.
Note: When you establish your own family super fund, you can stop your retirement funds being wasted on media advertising.
Original article here
Industry Super Fund adverts – link here
All super funds need to earn our trust
Industry Super Advert – Chickens in the hutch are actually the foxes in disguise
West Australian Sat 9 September 2017
“What’s with the chooks and the fox ad?” one of my mates asked a few days ago and I realised that most of us have no real idea of the message behind an Industry Superfunds campaign that’s particularly scary.
The advertisement shows a chicken hutch at night and out of the dark appear a number of foxes, clearly after the chooks.
The implication is that the foxes are there to tear the heads off the chooks and disappear into the night.
The deep voice tells us that the Government is about to let banks (aka the foxes) get in amongst our super and do unspeakable damage.
It’s sponsored by the Industry Super network – get the idea?
And given the performance of the bank over the past few years, when it comes to dodgy financial advice, immoral treatment of life insurance claims and money laundering (and all of that is with just one of them!), you would think it was a reasonable point to make.
Except it’s not a true reflection of what’s actually going on.
What’s at stake are the current and future fees that super funds clip off our money.
The amounts are staggering,
Let’s take a fund with 20,000 members with an average balance of $150,000.
The fund charges 0.6 per cent a year so the fees it collects from all members are $18 million each year.
If the fund doubles in size over five years, the fees collected will be $36 million.
Recent data shows that the union-dominated Industry Superfunds now accounts for a little over $0.5 trillion.
That means collectively, and based on an average of 0.6 per cent, total fees collected by the Industry super network could be an incredible $3.1 billion each year and growing.
The blue that’s raging at the moment is where compulsory super payments will go when a member gives no specific direction.
Under previous governments, industrial awards and other agreements stipulate that particular industries must make super payments to particular industry funds.
Construction mining and energy related super goes to Cbus, retail employees to REST, health to Host and so on.
Critics argue this arrangement makes funds lazy and unaccountable.
It guarantees inflows no matter what and competitive pressures won’t get the best outcomes for members.
The current Government essentially wants to undo those arrangements.
It wants to disconnect specific funds from awards and compel employers to offer choice.
When accountability and transparency of industry super at least matches that of a public company, that will be a worthwhile start.
Members of Industry super funds currently have no say on the make-up of the board of trustees, what they get paid or where their money is invested.
Where does the profit actually go?
Are investment decisions purely economic or are other influences in play?
Forget the foxes, the whole super world is a jungle at the moment.
APRA turns up heat on union’s super millions
Revenue and Financial Services Minister Kelly O’Dwyer.
- The Australian
- 12:00AM September 11, 2017
National Political Editor
The financial regulator will be granted broad new powers to force the $2.3 trillion superannuation industry to make detailed disclosures of millions of dollars in hidden annual payments to unions and employer groups, and issue orders against any fund that fails to act in the best interests of its members.
Legislation is expected to be introduced this week by the Turnbull government to give far-reaching oversight and intervention powers to the Australian Prudential Regulation Authority to crack down on the unscrupulous use of members’ funds.
This would include the ability for APRA to have greater scrutiny over the appointment of super fund board members, including ordering the removal of directors found not to be acting in members’ interests.
A focus of the new laws will be to also crack down on “dark payments” from industry funds to their associated unions — now estimated at more than $8 million a year — through transparency laws forcing the detailed disclosure of what has become a soaring cash pipeline to the union movement.
The Australian can reveal that the legislation drafted by Revenue and Financial Services Minister Kelly O’Dwyer would give unprecedented powers to APRA to intervene and make corrective directions to funds, mirroring similar powers granted to act against misconduct within the retail banking sector. The laws will cover all industry, retail and corporate super funds and are designed to give greater accountability and protection of members’ funds. Non-compliant funds that fail to reveal the details and nature of union and employer-group payments could face stringent action by APRA, including suspension of the payments.
- READ MORE
Exclusive: Members’ fees go to retailers
The changes, which need Senate crossbench or Labor support, will be the first plank in a series of legislative reforms The Australian understands will be put to the federal parliament this week.
Ms O’Dwyer said that under the new laws, members would also be granted lawful ability to seek answers from their funds on how their super contributions were being used.
“We want to see greater transparency with all super funds — whether they are industry, corporate or retail funds,” Ms O’Dwyer said. “After all, this is members’ money, and they get no say in whether their money is being siphoned off for purposes other than their own retirement savings.
“In the very near future, we will be introducing legislation that will make all super funds more transparent and also give members the ability to question how their fund is run and where their fund invests their money.”
While broad in nature, the transparency and members’ interest laws would further tighten the noose on what the government has described as “rivers of gold” flowing from super funds and workers’ entitlement funds particularly to the union movement.
According to Australian Electoral Commission disclosures and financial statements of the industry super funds, the government has estimated that more than $8m was paid last year to unions and declared only as unexplained “sponsorship” payments.
The super funds and unions have not been required to detail what those payments were used for. Over the past 10 years, unions have skimmed an estimated $53m to their coffers through these payments.
The industry fund Cbus, chaired by former Victorian Labor premier Steve Bracks and boasting 732,000 members and $32 billion in funds under management, last year paid $1.06m in sponsorship fees to unions including the ACTU, CFMEU, AWU, AMWU, ETU and the PTEU.
Of that, $351,705 was paid out in directors’ fees, including to union officials. Cbus does not disclose what the sponsorship arrangements are, only declaring in its financial statements the aggregate value of what it pays directors and sponsorships to affiliated unions and employer associations.
TWUSuper, which covers transport workers, paid almost $1m to the TWU last year and $126,000 in directors’ fees. It does not publicly release its financial statements. One of the largest industry funds, AustralianSuper, with an estimated two million members and $92bn in assets under management, declared only one payment to the ACTU of $225,000 for advertising, promotion and advocacy. However, several unions, including United Voice, have declared to the AEC that they received “sponsorship” payments from AustralianSuper.
The AWU also received “sponsorship” payments from AustralianSuper explained to The Australian as sponsorship of the AWU’s national conference.
With the growth in the investment value of the funds already at $2.3 trillion, and expected to grow to $4 trillion in the next 10 years, the union payments, if not scrutinised, would be expected to rise to $22m a year.
When combined with similar payments from various worker-entitlement funds established to create a future fund to cover redundancy, training and sickness benefits, the government estimates the total payback to the union movement was about $53m a year.
The government has accused the unions of having used such payments to bolster commercial and campaign operations, while unions continue to suffer from a continuing decline in their membership base over the past 20 years.
The Australian revealed last week the 47 trade unions had managed to build a combined political war chest now worth $1.5bn in assets and an estimated $900m a year in income.
The government claims there was a widespread practice of paying directors’ fees, applicable to union officials that sit on the boards of the industry super funds, directly to the unions rather than the directors themselves.
Original article here
Industry super funds ‘cashed-up activists’
By Brad Norington 13 July 2017 The Australian
The Liberal Party has escalated a campaign against the nation’s industry superannuation funds, claiming its analysis of $50 million paid to unions over a decade provides evidence of “brazen” political backing.
The Liberals’ acting federal director, Andrew Bragg, told The Australian he regarded industry super funds as “cashed-up activists” such as GetUp!, because retirement savings were being directed to Labor-aligned unions.
Mr Bragg said fund members deserved to know how their retirement money was used.
He said an analysis of Australian Electoral Commission data on the Liberals’ new website “The Fair Go”, which has highlighted $50m transferred to unions, helped give more transparency.
According to the Liberals’ collation of AEC disclosures, the militant Construction Forestry Mining and Energy Union was the biggest recipient of super fund payments, receiving $12.4m from 2007 to last year from First Super, CBUS and other funds.
Close behind was United Voice, a union representing cleaners and other low-paid workers, paid $10.1m by Host Plus and Australian Super over the decade. The Australian Workers Union, formerly led by Bill Shorten, was paid $1.8m by Australian Super, CBUS, AustSafe and others. The Transport Workers Union received $7.1m from a single fund, TWU Super.
In its final report, the recent royal commission into trade union corruption was critical of the TWU for compelling employers to pay super contributions of workers only to the union-backed fund, with the result that it “provides a large income stream each year to the TWU”.
The Liberals’ website says it accepts “there is no doubt” that industry funds are strong performers. But it is highly critical of industry fund boards as “opaque structures”. It attacks a “brazen” use of the industry super brand so money can be directed to unions as “minority interests skewing our public policy debate”.
Under Mr Bragg’s direction, the Liberals are escalating their campaign after releasing details of the $50m handed to unions in April to The Sunday Telegraph. Research of AEC data for the website is a project separate from the Turnbull government.
But senior Liberal sources told The Australian that Financial Services Minister Kelly O’Dwyer was expected to outline details of proposed changes to superannuation governance rules soon, after legislation to impose independent directors on industry super funds was blocked by Labor and the Greens in the Senate.
Original article here