Australia Post dumps AMP for Australian Super

AusSuper has won the $300m contract to manage the savings of Australia Post employees.

Australia Post chief Christine Holgate. Picture: AAP

AustralianSuper has been revealed as the winner of a $300 million contract to manage the savings of Australia Post employees after the postal service stripped the mandate from beleaguered wealth manager AMP earlier this month.

Along with the Australia Post mandate, AustralianSuper, the largest super fund in the country at $160 billion, is expecting its inflows to total $16bn this year, almost double the $9bn inflows it enjoyed last year.

It’s another blow for the troubled retail super fund sector, with Australia Post narrowing the tender to just two huge union-and-employer-backed industry funds — AustralianSuper and the $60bn Queensland-based Sunsuper. A spokesman for AustralianSuper declined to comment on the win.

The NSW and ACT Communications Union claimed it had a helping hand in the switch, after the union wrote to Australia Post chief Christine Holgate urging her to review its super mandate after AMP was accused of misleading the Australian Securities & Investments Commission over a fees-for-no-service scandal revealed at the banking royal commission.

“AustralianSuper has been ­selected as the new default superannuation fund provider for new employees who are ineligible to join the APSS and have not nominated another fund,” the union said.

While the retail sector has been demolished by the revelations during the royal commission, which found fee gouging, low returns, criminal breaches of the law, and multiple breaches of directors duties, the rival industry fund sector has been riding high.

Over the financial year through to the end of May, almost $15bn flowed into AustralianSuper’s coffers — 58 per cent of it from the major banks and AMP. The Anglican Diocese of Sydney moved its $250m fund from AMP to retail rival Mercer last year. Before the defections, AMP managed about $32bn under corporate super mandates.

The prudential regulator is currently pursuing 12 referrals of misconduct in the $2.8 trillion superannuation industry from the royal commission but there is no likelihood of civil or criminal penalties, as any potential guilty findings will allow the watchdog to use its directions power to overhaul rogue super funds.

AMP shares have sunk 62 per cent since it was scheduled to appear at the royal commission’s second round of hearings into the wealth management industry.  Earlier this month the banking regulator issued strict compliance orders on AMP Super amid concerns over its governance, risk culture and management following the royal commission.

The Australian Prudential Regulation Authority said it had issued directions and imposed licence conditions on AMP Superannuation and NM Super­annuation Proprietary — collectively AMP Super — to ensure “significant changes” were made to business practices.

The action comes after AMP Super was referred to APRA following the royal commission for failing to act in its members’ interests and potentially not complying with relevant laws.

APRA is also compelling the wealth group to appoint an external expert to report on compliance with its orders.

An AMP spokesperson said its workplace super clients periodically review and change their service arrangements, which is a process the company supports.

“Our workplace superannuation team takes pride in supporting more than 53,000 large and small Australian businesses with their employees’ superannuation arrangements,” AMP said.

“Providing great value and services to these members to help them achieve security in retirement is a priority for AMP. In the past 12 months, AMP has continued to win new mandates while growing some existing mandates, due to the strength of our offer.”