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Industry funds face RC grilling
The Royal Commission has signalled that it has done its homework on industry fund structures and the manner in which industry funds spend members’ funds.
In his opening statement to the current hearings of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry, counsel assisting, Michael Hodge QC, outlined the interlinkages between Industry Super Holdings and other entities such as Industry Super Australia.
He also pointed to the funding model underpinning the industry funds-backed publication, The New Daily, and funding for advertising campaigns such as “fox in the henhouse”.
He said the Royal Commission hearings would be looking at spending on marketing and advertising by industry funds and would be looking at particular examples: The New Daily and “fox in the henhouse”.
“The New Daily is an online publication that was originally funded by a group of industry funds and was then transferred to Industry Super Holdings,” Hodge said.
“It might be useful at this point for us to just say something very briefly about the structure of Industry Super Holdings. Industry Super Holdings is a company owned by a number of industry funds.
“AustralianSuper is the largest shareholder in Industry Super Holdings, followed by CBUS, HESTA and Host-Plus. Industry Super Holdings owns various entities that provide services to the industry funds. For example, Industry Fund Services Proprietary Limited is a subsidiary of ISH which provides financial advice to industry fund members.
“Industry Super Australia is also a wholly owned subsidiary of industry super holdings. ISA provides research, policy development, government relations, advocacy and promotional services for industry super funds,” Hodge said.
“A number of industry funds pay quarterly contributions to fund the services provided by ISA.”
“One particular campaign of ISA that attracted significant attention last year was an advertisement referred to as fox and henhouse,” Hodge said. “The question that has arisen with respect to this ad is how it satisfies the sole purpose test. How does it maintain retirement benefits?”
He said the Royal Commission would be exploring this issue with some industry funds.
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Note related to this article. I would like to ask whether there is a good argument in favour of the current super legislation which disallows personal contributions to super beyond the age of 75 if the contributor is still working. Is there a latent ageist bias underlying this position?