Aussie super funds racked up $12b in expenses. See how much your fund is spending

Australia’s $4 trillion superannuation sector has become so large – and grown so rapidly – that the Reserve Bank warned last month it posed a rising risk to the country’s financial stability.

The boom has also caught the attention of the Australian Prudential Regulation Authority (APRA), which has stepped up its scrutiny of super funds and put them on notice over their $12 billion expenses bill.

Should super funds spend millions of dollars on advertising? What is the financial benefit of sponsoring AFL teams? Where is the value in splashing cash on extravagant travel and conferences?

APRA’s Margaret Cole is keeping a close eye on super funds’ spending. The regulator this week released inaugural data showing the scale of funds’ expenditure. Credit: Oscar Colman

These are the questions the prudential regulator has been asking to gauge whether the funds are acting in the best financial interests of their members, a legislative requirement since 2021.

And at times, the responses it has received have fallen short.

To “shine more light” on where funds are spending members’ money and improve scrutiny of the industry, APRA this week released its inaugural superannuation statistics that provide a detailed breakdown of funds’ $12 billion expenses in 2022-23.

We have prepared the data for you in a more digestible way so you can search for some of Australia’s largest super funds and see how much they spend on marketing and sponsorship, industry bodies, salaries of executives and directors, and intra-fund advice – the advice a trustee can provide to members with the cost borne by all members of the fund.

It is important to note the data is more than a year old, and the funds’ net assets have grown substantially since then.

For instance, AustralianSuper, the nation’s largest super fund with more than $340 billion in assets, had about $270 billion in assets in June 30, 2023, when it spent $470 million on expenses – or about 0.17 per cent.

Directors were remunerated more than $2.3 million and executives were paid $8.3 million, and the fund spent $60 million on promotion, marketing and sponsorship – the largest spend of the big funds – which has become a key focus for APRA. AustralianSuper also splashed $1.4 million on industry associations and unions.

Colonial First State, the largest retail fund with $82 billion in assets, spent $342 million on expenses – or about 0.42 per cent. About $8 million was spent on promotion, marketing and sponsorship, $413,000 on executive remuneration and $850,000 on director remuneration.

Like other big retail funds, it did not pay any industry bodies or unions, according to the data, nor did it spend money on intra-fund advice.

In contrast, Australian Retirement Trust, with $236 billion in assets, spent $656 million on expenses (0.28 per cent) and almost $18 million on intra-fund advice. It also spent almost $42 million on promotions, marketing and sponsorship, and almost $95,000 on industry bodies and unions.

Cbus, which has come under fire for its association with the trouble-plagued CFMEU, paid the union almost $850,000 in the 2023 financial year. BUSSQ, First Super and Mine Super handed a further $3 million for a mix of sponsorship, administration and advertising expenses.

Below is a breakdown of the funds’ expenses bill as a percentage of their total assets.

APRA deputy chair Margaret Cole wrote to all the super funds last week to put them on notice about their expenses balance.

In her letter, she said the regulator would focus on “discretionary expenditure” such as travel, entertainment and conferences, and payments where the benefit to members was not immediately apparent over the next 12 months.

Cole this week said APRA considered “blacklisting” certain types of expenditure, such as advertisements and payments to unions, but ultimately decided against it.

“There are no categories where spending is inherently bad or inherently good,” she said. “The measure of whether expenditure is appropriate ... is not whether it passes the pub test ... The measure is whether trustees can demonstrate that the spend is in the best financial interests of its members.”

Super Consumers Australia director Xavier O’Halloran said the data set was good for transparency, and one it had been calling for for years.

“This is a really good resource to keep super funds accountable,” O’Halloran said. “[They’re] spending all this money on marketing – what’s the benefit we’re getting?”

However, Liberal senator Andrew Bragg, who has been leading the federal opposition’s push to reform the superannuation industry, blasted Cole’s comments and said the regulator needed to reflect on its role.

“It is disgraceful and reprehensible they’re giving a green light to payments to unions, and the CFMEU,” Bragg said. “The law and the explanatory memorandum is very clear what best financial interest is and what isn’t. How can a payment to the CFMEU pass that?

“The legislation is fine – it’s not being administered properly … If APRA wants to write the law, the APRA commissioners should run for parliament.”

The Association of Superannuation Funds of Australia chief executive Mary Delahunty said the industry welcomed the release of the data to help build “high levels of trust”.

“In a landscape where funds have delivered consistently strong returns for members, ASFA emphasises the need for a balanced view of marketing and related expenditures,” Delahunty said.

“The real measure lies in whether this contributes to informed member decision-making, supports the long-term growth of retirement savings and ultimately delivers strong returns.”

Financial Services Council chief executive Blake Briggs said the increased transparency around payments made to industry associations would focus trustees’ minds on whether they were getting value for their members.

“Association fees across the multiple industry bodies are in excess of $30 million each year, and with the regulator flagging heightened scrutiny of attendance at industry conferences and related expenses, it is in the best interests of superannuation consumers for trustees to be prudent in ensuring they are getting clear value for money,” Briggs said.

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