ISA calls for bank super scrutiny
Future debate around the governance of superannuation funds needs to be evidence-based and be inclusive of bank-owned funds, according to Industry Super Australia (ISA).
Issuing a response to the Financial System Inquiry (FSI), the ISA said it supported the inquiry's call for bipartisan agreement on the purpose of the superannuation system and the need for policy stability.
"Equally, future debate on the governance of superannuation funds needs to be evidence based," it said. "The representative trustee system is a feature of industry super funds, public sector funds and corporate funds. These funds return all profits to members, and have on average, outperformed bank-owned super funds over the past 17 years according to data published by the regulator, APRA."
ISA chief executive, David Whiteley said industry funds welcomed a debate how to ensure the super system aced exclusively in the interests of fund members.
"I am confident that the Government in considering the most appropriate governance of super funds will be reviewing the governance of bank-owned super funds. Specifically, they will want to investigate the trade-off between returns to members and dividends paid to bank shareholders," Whiteley said.
He said the issue of returns to members and dividends paid to bank shareholders was "the most obvious cause of tension and inefficiency in Australia's compulsory super system".
"All the evidence points to the representative trustee system being the model that puts members' best interests front and centre and has delivered stronger investment returns and ultimately bigger super nest eggs," Whiteley claimed.
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