Young workers in dangerous jobs left without proper insurance cover, warns Cbus

The $70 billion superannuation fund for construction workers wants the federal government to overhaul a key pillar of reforms introduced last year which “staple” members to their first fund, voicing concerns for young workers in dangerous jobs.

Cbus, which represents 850,000 members mostly in blue-collar work, described the stapling measure as a “failed policy” that has done more harm than good for young workers in hazardous occupations such as building and construction.

Cbus chief Justin Arter said he was worried about younger workers entering construction without the proper insurance. Credit: Arsineh Houspian

The fund’s chief executive, Justin Arter, said there has been more young people joining the construction industry who were “stapled” to the fund associated with their first job, such as in retail or fast food. Those funds did not have the appropriate insurance to cover workers in a hazardous occupation, he said.

“We were worried about this being an occurrence and it’s now starting to emerge,” Arter said.

The Morrison government last year introduced the Your Future Your Super laws and aimed to improve member engagement and performance, and reduce fees. It included a performance test that bans underperforming funds from accepting new members, and a “stapling” measure that ties workers to one fund.

The “stapling” measure was celebrated for its potential to stamp out duplicate accounts and prevent people from whittling away their super on fees, but it also raised concerns about the potential for workers in hazardous industries, such as construction, truck driving and mining, to be left without suitable insurance.

Super funds that were created for specific industries automatically sign up members for insurance tailored to their specific professions, however some other funds have policies that exclude high-risk occupations.

Assistant treasurer Stephen Jones announced a review of Your Future Your Super laws following the federal election. Treasury will examine any unintended consequences and implementation issues with the reforms.

In Cbus’ submission to the review, it says it wants the “failed policy” of stapling members to their first fund to be abandoned, and if this recommendation is not accepted, it wants an exception to the stapling rule for the 2.7 million workers in hazardous occupations so they default to the fund named in their EBA or award.

Arter said young people tended not to pay as much attention to their super or insurance policy, and they were finding young workers and apprentices entering the construction industry without any insurance cover.

“Getting those young members to engage and switch is one thing of course, which we could do, but the safest and by far the most efficacious way to do it is to have those stapling provisions changed such that if you’re involved in hazardous activity, then you have to be stapled to a fund that has the right insurance,” he said.

The submissions claim that it is employers, or older, more experienced colleagues on site who are now carrying the responsibility of reminding younger members to check their cover.

Super policy expert Alex Dunnin from Rainmaker said he understood Cbus’ concerns, but stapling had been introduced to make it easier for fund members when they change jobs, and to stop employers pushing new workers into funds the company likes, but the worker may not.

“I understand the politics of super stapling and how it was seen as move by the former government to try to snooker some industry funds. But ironically it has just made these big funds stronger. Cbus is unfortunately just caught in the crossfire. They are a very highly regarded fund and given the nature of the industry they serve, when new workers join the construction industry they may be in bad funds – and Cbus is very concerned that these young members should not be hogtied to these dud funds. This is a bigger issue for Cbus no doubt because of the insurance issues,” he said.

“But equally, Cbus has every opportunity to persuade these young workers to swap funds, and we should be wary of forcing people into super funds they don’t want to join.”

Industry Super Australia has also questioned the stapling regime. In its submission to the review, it says members should instead be stapled to their balances, which would be rolled over into their new account when they join a new employer unless they choose otherwise.

“We also say that members should only be stapled to funds that pass the performance test,” said Industry Super Australia chief Bernie Dean.

“In a compulsory system, disengaged members should not be left languishing in a dud super fund. The government needs to upgrade consumer protections, so members are only stapled to the best funds, who have passed the performance tests.”

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