Industry superannuation funds stake out a federal election wishlist

The increasingly powerful industry superannuation funds want a halt to the ‘endless tinkering’ with the sector’s foundations.

Industry Super Australia chief executive Bernie Dean said any policy changes had to be driven by members’ financial interests – nothing else. Picture: Kym Smith

Industry superannuation funds have staked out their territory ahead of the federal election due by next May, pushing for four priorities including a halt to the “endless tinkering” with the $3.4 trillion super system’s foundations.

Industry Super Australia said any future government should also bridge the gender gap in super, fix the $5bn-a-year unpaid super scourge, and help protect members from poorly-performed funds.

ISA chief executive Bernie Dean said any policy changes had to be driven by members’ financial interests – nothing else.

“Not everyone is getting the same deal,” Mr Dean said.

“We need to make sure young mums are paid super when they take time off to raise children, get workers’ super paid with their wages, and protect them from ending up stuck in a dud fund.”

Workers and retirees, he said, had a great aversion to politicians “messing around” with their super.

Sticking with the foundations, like the plan to increase the super guarantee to 12 per cent and preserving super for retirement would go “a long way to giving people the certainty they crave.”

The ISA said retirement savings grew because of the strength of the system’s foundations, including compulsion, preservation until retirement and universality.

If people were to have a dignified retirement, the increase in the super guarantee charge to 12 per cent had to be implemented, and any further relaxation of the existing rules for the early release of super had to be ruled out.

While the system was not perfect, ISA said too many women were still at risk of retiring into poverty and young mothers were denied super contributions when on paid parental leave.

The lion’s share of tax concessions still went to wealthy men, with mothers missing out on almost $1.6bn in super because it was not paid on commonwealth parental leave.

ISA said this cost a mother of two about $14,000 at retirement.

About three million Australians – a quarter of the workforce – were also not getting all the super to which they were entitled.

The $5bn a year in unpaid super needed to be urgently addressed by mandating that super was paid at the same time as wages, not quarterly.

While the Your Future, Your Super package had made important reforms to stop the proliferation of multiple super accounts, and had introduced a performance test, ISA said the test needed to be strengthened and expanded to include all products and funds.

The legislation, it said, should be amended to ensure workers did get lumped into a dud fund.

ISA said people understood that super was a long-term investment, designed to withstand economic shocks and ups and volatility.

“Increasing rapidly in scale, and with long term investment horizons, super is playing a growing role in our economy, with over 10 per cent of the Australian share market effectively owned by members through their collective savings,” it said.

“Funds are also shaping the future of our nation, investing directly in businesses and essential infrastructure.”