Everybody is conflicted in superannuation except for the employers who collect the funds and the people who own the funds.
To paraphrase George Orwell – “All people in the superannuation industry are treated equally but some are more equal than others”
COSBOA notes the conflict reported today (24 April 2014) in the AFR between retail superannuation funds, pharmacy industry superannuation funds and the ACTU. These organisations are squabbling over who can control an employer’s responsibility to choose a default super fund. The question is why is an employer subject to control by these organisations? Remove the employer from the process and the squabble disappears.
Peter Strong, CEO of COSBOA said today that “this conflict, this on-going conflict, between the retail funds and the industry funds can be stopped without escalation of the conflict and without resorting to the UN. Include superannuation in PAYE payments to the ATO and most of the issues of conflict disappear.”
COSBOA believes that we need to remove employers from the role of collecting and distributing superannuation funds as it adds a complexity to the system that means inefficiencies occur and the earnings of the members are decreased. COSBOA has also reviewed the board membership of industry funds and have found that most directors are employees of, or have direct connection to, big business, unions and industry associations. This includes the ACTU, AMWU, CFMEU, AWU, BCA, MBA, Woolworths, Coles, Myer and the MTAA and the list goes on. COSBOA also notes that Tony Abbott promised to remove employers from the role of collecting super and we see the movement of the current Superannuation clearing house to the ATO as the first step in that process.
Mr Strong added “we agree with the issue of conflict of interest highlighted in today’s report but it seems that everybody is conflicted including some Commissioners in the Fair Work Commissioner who are past Directors of superfunds.”
Mr Strong also added “we know that the whole superannuation management process and governance is being reviewed and a shakeup will occur, this needs to include higher transparency if we are to fix this Animal Farm scenario. In the end if it is okay for union and business association people to get paid for their role in the industry then it is also okay to pay employers for collecting the money that they are paid. If the superannuation industry does not wish to pay employers for the work they do then they should support removing employers from the collection process. This will add at least $2 billion a year to the funds bottom line particularly as they will not have to manage their interaction with almost a million employers. But, sadly, the greed gets in the way of the good business sense of the small end of town, again.”
Contact Peter Strong 0433 644 097
See: Compare the Pair & COSBOA’s proposal to add efficiency to superfunds, employers and the economy.