AMP stripped of right to run Australia Post super fund

Australia Post has stripped AMP of the right to run its $300m default superannuation fund.

Australia Post has stripped AMP of the right to run its $300 million default superannuation fund, as the embattled wealth manager continues to be battered by fallout from its disastrous appearances before the banking royal commission.

The move brings fund outflows from AMP’s corporate super business this fortnight to more than $500m, after the Anglican Diocese of Sydney moved its $250m fund to retail rival Mercer.

Before the latest defections, AMP managed about $32 billion under corporate super mandates, but this number is widely expected to shrink further as more companies pull their workers’ savings from the troubled company’s grasp.

The move comes as not-for-profit industry super funds, jointly controlled by unions and employers, enjoy record inflows worth billions of dollars from individuals fleeing the retail sector, following the royal commission’s exposure of rorts and ripoffs by for-profit managers.

Australia Post began a review of its super arrangements in March — the month before a first appearance before Kenneth Hayne’s commission exposed a laundry list of misdeeds at AMP’s financial advice arm that included deliberately charging fees for services that were never provided to members and then misleading the corporate regulator 20 times over the issue.

AMP returned to the commission hot seat in August and, in a session dealing directly with super, revealed shockingly low returns for investors in the company’s cash option and laid bare its conflict of interest as both a trustee of retirement savers’ funds and a company trying to make a profit by charging management fees.

$3.28 AMP closed up 8¢ p

The revelations sparked an exodus among AMP’s corporate ranks and have smashed its shares, which have shed 30 per cent of their value so far this year.

Australia Post has not yet decided on a new home for its default super.

“After an extensive review, and to ensure the best value for our employees, we have decided in the case of our default super ­arrangements to explore the market,” a spokesman said.

“We will be working closely with our employees during this time, and anticipate we will have arrangements finalised in the coming months.”

An AMP spokeswoman confirmed the company had lost the Post mandate, but said it was closer to $206m.

Neither Post nor AMP were able to explain the discrepancy last night.

“As part of good governance, we expect our customers to periodically review their service arrangements,” AMP’s spokeswoman said.

“We support and participate in this process. If organisations decide to change default providers we do everything possible to ensure a smooth transition of members’ benefits.”

Post’s default offering is a small part of its overall super scheme.

The Australia Post Super Scheme has $7.8bn in assets under management and more than 50,000 members.

It is jointly managed by employer representatives nominated by Post, and staff representatives nominated by the Communications Electrical Plumbing Union, the Community and Public Sector Union and the Australian Council of Trade Unions, along the same lines as industry funds.

Some 33,500 savers are shielded from the vagaries of the market because they are in a defined benefits sub-scheme, which has assets of $4.2bn, while the remainder are in an accumulation option.