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Industry super funds warn of savings cash grab by the big banks

THE battle to manage the retirement savings of five million Aussie workers who are currently members of not-for-profit superannuation funds has intensified.

At stake is half a trillion dollars held by industry funds, which big banks want available to their retail super outlets.

The industry funds are today launching a campaign aimed at politicians, warning that giving banks greater access to the savings is akin to letting foxes into the henhouse.

The Federal Government is under pressure to reject attempts by the banks to reduce the status of the not-for-profit industry funds as the go-to default schemes for workers without super.

The industry funds also want the government to block attempts to decouple superannuation from the workplace relations system.

They today launched an advertising campaign in which a suited figure representing a politician unlocks a henhouse door to let in foxes.

Currently the Fair Work Commission, when it has to look after a worker without super, will usually default to an industry fund because the sector has no fees, and in its top tiers, has better returns than the bank-run schemes.

The banks want a stronger presence when those decisions are made, and complain they are being kept out by the “IR Club”.

And they want tougher governance rules, like their own, to be applied to industry funds.

“First, they aim to increase opportunities for banks to boost their market share and profitability from compulsory super,” Industry Super Australia (ISA) chief executive David Whiteley said.

“Secondly, and more importantly, they could reduce members’ super nest eggs by disrupting and undermining the model used by top performing, not-for-profit super funds.”

Australia’s superannuation system is made up mainly by industry funds, the public service funds, or pirate arrangements, and retail funds, which banks want to sell to more private sector workers.

ISA fears the Government could open up the short-list of default funds to banks, which it claims would hurt workers who do not actively slecet their own fund.

It also fears there will be moves to remove the link between super and employment laws, which began with the Prices and Incomes Accord of 1983 and the introduction of compulsory super contributions by employers 25 years ago. This could give banks greater access to the market. ISA claims there already have been attempts to “remove super funds from employment awards.

“The banks want to replace the cost-efficient and high-performing not-for-profit model with cross-selling to consumers and by bundling business banking and super with employers,” Mr Whiteley.

“Compulsory super is critically important to individuals and the economy. Why anyone would consider undermining the best-performing model of the system to aid the worst-performing simply defies logic”.

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