Last week, InvestorDaily reported that the Treasurer pitched “trillions of patient, friendly pension capital” to the US at a high-level summit in New York and Washington, where several funds, along with ASFA and Super Members Council (SMC), sought investment opportunities for Australia’s burgeoning super pool.
InvestorDaily understands that Senator Andrew Bragg posed 13 questions to super funds ahead of their trip, seeking details on the total costs of attending, whether a best financial interests duty (BFID) assessment was conducted, any government assistance received, and whether a return on investment (ROI) analysis was undertaken for the summit.
Among the questions, Senator Bragg also pressed funds on their involvement in a documentary allegedly filmed during the US trip, asking whether they contributed directly or indirectly and whether legal advice on BFID was sought before participating.
Last week, SMC executive Matthew Linden said fund leaders are in the US to “go into bat for members and secure the best investment opportunities”.
“This summit aims to show that Australian super funds offer a trusted and reliable pool of investment capital for the US, as well as helping to strengthen ties,” Linden said.
“What has struck US officials and investors is how the strength of Australia’s super system policy settings – automatic super payments, near universal coverage and preservation of savings until retirement – have helped Australians grow world-leading retirement nest eggs.”
Also at the summit in the US, Treasurer Jim Chalmers suggested that in exchange for welcoming Australia’s superannuation investments, the country is prepared to supply 36 of the 50 minerals the US deems critical for advanced technology and defence.
“Around half of our exports are inputs into American domestic production processes,” the Treasurer said in a speech.
“We are already one of America’s top 10 foreign investors. And we have trillions of patient, friendly pension capital ready to invest in the new opportunities that lie before us,” he added.
Australian super funds have become increasingly reliant on the US, with this reliance expected to explode from around US$400 billion to US$1 trillion over the next decade, a report commissioned by IFM Investors said.
The report, published last week, highlighted opportunities for greater collaboration between Australian pension funds and the US, with investments in US private markets alone potentially exceeding US$240 billion by 2035.
The Coalition has made headlines in recent months over its alleged plans to dismantle the superannuation system, with Bragg emerging as the most vocal proponent of this idea, advocating for a voluntary superannuation system in public and in his book, titled Bad Egg: How to Fix Super.
Last month, however, in remarks made to InvestorDaily’s sister brand ifa, shadow assistant treasurer and shadow minister for financial services Luke Howarth said senior members of the Coalition, including himself, support super.
“Angus, Jane and myself have been clear that we support super,” Howarth said, alluding to shadow treasurer Angus Taylor and Senator Jane Hume.
“I started salary sacrificing at a young age on the advice of my dad.
“I know the importance of compounding and super’s role in our retirement system,” Howarth said, adding the Coalition is committed to maintaining the superannuation guarantee at 12 per cent.
The Coalition came under fire in January, following reports it would reduce the superannuation guarantee if it wins the next election.
Namely, The Australian reported at the time that a number of backbenchers were lobbying Peter Dutton to reduce the superannuation guarantee to 9 per cent from the current 11.5 per cent.
In response to reports, Treasurer Chalmers accused the Coalition of “hacking into” and “undermining super”.
“They don’t believe in superannuation, and people would be worse off as a consequence. They want people retiring with less when they retire and they want them earning less when they’re working,” he said.
The commotion around the SG is just one of a few criticisms levelled at the Coalition. Namely, in October last year, a speech given by Taylor saw the shadow treasurer accused of plotting to dismantle compulsory super to align it with global retirement schemes, particularly the US 401(k) model – a voluntary framework.
In a speech at Sydney University at the time, Taylor said: “The Coalition has started by aligning superannuation with other global retirement schemes – like 401k – that allow withdrawals for the purpose of purchasing a first home.”
While the Australian Council of Trade Unions decried Taylor’s remarks, the CEO of the Association of Superannuation Funds of Australia Mary Delahunty stepped in to defend him, arguing that Taylor’s sentence was taken out of context.
“The full sentence makes it clear that that reference to the substandard American system is drawing a comparison to the Coalition’s policy on early access,” Delahunty said. “Broadly, it’s not Coalition policy.”
However, Coalition members have previously argued for a more flexible superannuation system that enables Australians to make voluntary contributions based on their individual financial circumstances.
What Bragg’s latest move means and whether funds will be invited to attend a session of Senate estimates remains unclear for now.
