Sent: 20-04-2010 10:09:04
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Keeping Super Safe
The Institute of Public Affairs has produced a report detailing the lack of disclosure about larger retail super funds and the concentration in ownership and control.
The report focuses on industry super funds but also looks at all large super funds because it is these funds which are predominantly nominated as default super funds.
Amongst its conclusions, the report says "there is strong international and domestic evidence to show that superannuation funds and/or trust arrangements can be subject to abuse. There is nothing inherently 'safe' about the trust arrangements under which superannuation funds are managed.
"This report calls for new laws that will force Australian Prudential Regulation Authority (APRA) regulated superannuation funds to comply with extremely high standards of disclosure and transparency.
"A fund member, investment advisor, or member of the public, should be able go into the website of any retail or industry superannuation fund and obtain enough information so they can understand where their money is invested, how it is performing relative to similar funds, who gets paid to manage and administer the fund, and how much is paid, and whether the fund's trustees have any cross-directorships."
The 10 largest industry super funds controlled over 70 per cent of the money invested in industry super funds at 31 December 2009. The report says, "the men and women who are the trustees and executives of these 10 largest funds are therefore in an extremely powerful position given they choose where over $155 billion of workers money is invested. Industry funds have spun off a web of interlocking companies and trusts that undertake much of superannuation administration and management. At the heart of this web is an entity called Industry Super Holdings Pty Ltd (ISH) which is owned by a clutch of industry funds."
The report then proceeds to list a range of companies and individuals involved in ISH and the entities it either owns or runs and the entities that the individuals help control.
The issue of concentration is not new to Australian industry so one could ask why should industry super funds be singled out and all other super areas left alone.
I don't think they are. The same level of concentration occurs in retail super funds.
It will be interesting to see what the current Government does about this issue, if anything. Technically this could be dealt with by the Cooper Review.
The IPA report is well worth a read. You can view a copy of the report at: http://www.atcbiz.com.au/r.php?r=uf5q2uk
Finally please consider purchasing a copy of my book. You can look at the contents page at the following link: http://www.atcbiz.com.au/r.php?r=0mjd6ne
Two options are available - once only subscription - $55 inc GST - or an annual subscription will gives you access to all the updates made throughout the year ($120 inc GST). The book can be purchased at the following link: http://www.atcbiz.com.au/r.php?r=5a4agqb
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