The battle for the super contributions of millions of Australian workers is heating up with industry funds launching an advertising campaign to combat intensive lobbying by the big banks to become providers of default super funds.
Industry Super Australia (ISA) – the umbrella organisation which represents the not-for-profit superannuation sector* – say big banks and for-profit super funds have been lobbying the government to become the default destination for the super contributions of employees who do not choose their own fund.
Currently, if an employer or employee does not make a conscious decision over where they want their super to go, it is directed to a default fund.
The Financial Services Council (FSC), which represents some of Australia’s biggest banks and retail superannuation funds, says that allowing the changes would improve competition in the sector and lead to lower fees for members.
According to ISA, the ad blitz aims to make industry fund members, employers and employees aware of what the retail funds are lobbying the government to change.
“The vast majority of employees either don’t choose their own fund or rely on the employer selection of the default fund,” ISA chief executive David Whitely told The New Daily.
“The banks are lobbying the government very strenuously to change how people join funds.
“ISA is keen to raise awareness amongst our members and employers of the importance of ensuring that the fund of the workplace is one that delivers strong investment returns.”
The advertisements began screening on free-to-air television, subscription TV, online media and across outdoor space from Sunday evening.
However, early in August the FSC said in a statement that more competition was needed to reduce superannuation fees. The FSC was contacted for comment on Sunday by The New Daily but did not respond.
According to the release, the FSC wants its funds to be a default option for employer and employee super contributions.
“There are few other consumer marketplaces where a limited set of providers enjoy a monopoly while other licensed providers are banned from competing. No fund should be afraid of competition and consumer choice,” FSC CEO Sally Loane said, adding: “All Australians should have the right to choose the best performing super fund − something that will inject much needed competition in the industry.”
The real battleground? Your super balance
The industry super funds say workers are better off having their compulsory contributions directed into an industry fund, saying the returns to members support their argument.
Data from rating company Chant West for 2014-2015 showed the top 10 super funds ranked by returns was made up overwhelmingly by industry funds, with just one public sector fund and two retail funds on the list.
Overall, not-for-profit funds – which include industry, public sector and corporate funds (such as Telstra or Qantas) – returned on average 10.2 per cent. Retail funds, which are generally owned by banks on a for-profit basis, returned 9.6 per cent on average.
ISA said a 2015 survey of 550 small and medium businesses found 26 per cent of employers had been asked by a major bank to change their default super fund to the bank’s own fund in the past year.
But the FSC maintain some of their member funds like AMP, Bendigo Bank and ANZ have lower fees than the industry average, according to Chant West analysis.
Here’s one of the television ads:
* DISCLOSURE: The New Daily is owned by a group of industry super funds.