Superannuation funds which invite employers to sit in corporate boxes during major sporting events may be guilty of providing an illegal inducement, according to the Australian Securities and Investments Commission (ASIC).
ASIC’s submission to the Productivity Commission (PC) review into alternative default models has pointed out that inducements are not just those capable of being provided by banks but can include corporate hospitality to either employers or employees.
The ASIC submission said section 68A of the Superannuation Industry Supervision (SIS) Act prohibits the trustee of a superannuation fund, or an associate of the trustee, from providing or withholding a good or a service to a person on the condition that one or more of the person’s employees becomes a member of the superannuation fund, with some exceptions.
It said the regulator had published guidance for employers “that illegal inducements from superannuation funds may take any form, and include corporate hospitality, holidays, or discounted rates on products or services”.
“We have also advised employers to make sure any incentives do not distract them from making an informed decision, and to focus on what’s best for their employees,” it said.
“However, the real prospect remains of employers selecting a fund as a result of inducement, including lawful inducements and on the basis of competition directed to the employer rather than to the quality of the product for retirement income purposes of the employees.”
The ASIC submission also pointed out that there was no limitation on superannuation funds targeting employees with inducements.
It said there was no equivalent of s68A of the SIS Act in relation to employee choice, meaning it was not illegal for a superannuation fund or its associates to give benefits to an employee as an incentive for them to choose their fund.
“ASIC has encouraged fund trustees to be cautious that the use of these incentives does not distract a member from making an informed financial decision about their products and services,” the submission said.
