The government’s Your Future Your Super draft legislation, released late Thursday, will require trustees to prove that they are acting in the best financial interests of members by identifying a “quantifiable financial benefit” backed up by “robust” evidence when spending member money.
“Numerous reports and hearings in recent years have highlighted the extent of spending by superannuation funds on discretionary items like advertising, sponsorships and corporate entertainment,” the draft legislation reads.
“Inappropriate expenditure on these items risks compromising member outcomes and eroding retirement incomes.”
The draft legislation gives a number of examples of inappropriate spending, including on wellbeing and counselling services as part of a “holistic retirement experience”. However, the legislation does give some breathing room on advertising, with campaigns that provide a quantifiable benefit to members – such as creating fee reductions or enhancing performance by bringing new members into the fund, as was the case with one campaign run by AustralianSuper – getting the green light.
“Other strategic discretionary expenditure, such as expenditure relating to building a brand, promoting awareness of the fund or supporting external activities, which are not supported by an identifiable and quantifiable financial benefit to members, articulated in a clear business case, are unlikely to satisfy the requirements of the best financial interests obligation,” the draft legislation reads.
The legislation also lays out potential civil penalties for trustees found to have breached it, escalating to criminal penalties where dishonest or an intention to deceive or defraud was found.
Senator Andrew Bragg championed the draft legislation, saying the new laws “will stop the waste” and lashing television campaigns run by lobby group Industry Super Australia featuring its chairman Greg Combet.
“Super funds shouldn’t waste a cent of workers’ money. This applies to all funds equally. The most shocking waste is occurring through the political Combet adverts. These must go,” Mr Bragg said.
