Does your super fund look after your best interests?

Nicholas McCallum

If you trust them with your money, you must know your super investors. 

To most super fund members, investment performance is what really matters.

And so it should: it’s your money, your future livelihood.

So it makes sense that when investing money on your behalf a fund should deliver strong investment performance AND keep your best interests in mind.

Some funds do one or the other. Some funds struggle to do either.

For many industry fund members, their fund’s profit-for-members philosophy ticks both boxes. They also throw in low fees for good measure. And it’s served them well:

Over the 12 months to 30 June 2018, growth investment options for industry super funds delivered 10.3% compared with the 9.0% return of retail funds. Over five years industry funds returned 9.7%; retail funds 8.5%. The outperformance continues over three, seven, 10 and even 15-year time periods.[1]


Who are your investors?

The people investing your savings on your behalf are called trustees, and are usually the directors of the Fund’s board.

The Federal Government’s Strengthening Trustee Arrangements Bill 2017 proposes that super funds be required to have at least one-third of their directors as independents, including the chair of the trustee board.

Why? Well, because there’s a belief that this would improve the conduct of superannuation trustees – particularly in relation to conflicts of interest – by bringing in governance standards that apply to other industries such as banking and insurance.[2]

Generally, industry funds don’t follow the independent trustee model proposed by the Bill. Industry funds typically follow an equal representation model where the trustee board comprises half member representatives and half employer representatives, with a chair (and sometimes with an independent director as well).

It’s exactly the sort of model that the Bill would potentially dismantle.

Industry Super Australia claims that ‘for over 30 years the [equal representation model has] ensured that not-for-profit funds deliver higher average net returns to members than retail funds … [and] have remained free of the numerous scandals that have plagued the banks and the superannuation funds they own.’[3]


Where’s the ‘trust’ in trustee?

In this year’s Banking Royal Commission, ‘numerous scandals’ were uncovered across a number of financial sectors that revealed serious breaches of trust in the system.

The Commission – which is ongoing – has spent months looking into the way trustees manage their clients and their clients’ money, and the interim findings weren’t pretty.

While industry funds appeared to have come out of the Superannuation round of the Commission relatively cleanly,[4] a number of retail and bank-owned funds were found to have operated against their clients’ best interests.

The list of breaches included charging fees for no service, charging fees to dead people and continuing to deduct commissions even after they were banned. All the while ‘record profits’ in the banking sector continued, creating value for shareholders.[5]

Former ASIC Deputy Chair Peter Kell told the Commission that as much as $1b has been taken out of super accounts by AMP and the big 4 banks[6], and that ‘there is a very high likelihood of [criminal] proceedings commencing in the near future’.[7]

It’s probably not surprising, then, that reports have since surfaced that the Government’s Strengthening Trustee Arrangements Bill has been ‘shelved’.[8]


Where are we at now?

Well, a big question is whether the outcomes of the Royal Commission – and any criminal proceedings that might take place – will result in any remodelling of the trustee structure of retail funds to enshrine the best interests of their clients.

For industry super funds, it’s largely business as usual.

For you, it’s time to look at your super fund and see if it ticks the right boxes. And if it doesn’t, to ask why not?

To find out more about Energy Super – an industry super fund specialising in the energy and related industries – contact us on 1300 436 374 or email us on [email protected]

This article was prepared in September 2018 by Electricity Supply Industry Superannuation (Qld) Ltd (ABN 30 069 634 439) (AFSL 336567), the Trustee and Issuer of Energy Super (ABN 33 761 363 685). Before deciding whether Energy Super is appropriate for you read the Product Disclosure Statement, available at or by calling 1300 436 374.


[1] Chant West, ‘Super funds have that positive feeling – yet again’, 19 July 2018.

[2] Explanatory Memorandum to Superannuation Laws Amendment Bill 2017, pp 9–10.

[3] ISA Submission on the Trustee Arrangements Bill ‘Equal Representation: governing for members’, 29 September 2017.

[4] AdviserRatings, ‘Royal Commission – Learnings from the super hearings’, 20 August 2018.

[5] Business Insider Australia, ‘How Australia’s major banks have lifted profit while shedding thousands of staff’, 9 May 2017.

[6] ABC News, ‘Banking royal commission: Superannuation swindle sees your savings boost bank bonuses’, 20 August 2018.

[7] ABC News, ‘Banking royal commission: Superannuation swindle sees your savings boost bank bonuses’, 20 August 2018.

[8] ABC News, ‘Government to shelve industry super board changes’, 28 August 2018. 




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