By Steven Johnson, Daily Mail Australia economics reporter
Updated: 01:39 08 Sep 2023
Business regulators have taken legal action against Australia’s largest superannuation fund for practices that could reduce retirement savings over a decade.
The Australian Securities and Investments Commission has accused Australian Super, the trustee of Australia’s largest super fund, of failing to identify members with multiple accounts.
People with multiple accounts pay recurring account maintenance fees that eventually erode their retirement savings by the time they reach age 67 and receive their old-age pension.
ASIC said 90,000 AustralianSuper members were affected between July 1, 2013 and March 31, 2023, resulting in a total loss of $69 million and many of its employees as default Super Accounts. claims to have had it.
AustralianSuper, a trade union-backed industry superfund with some 3 million members, became aware of the problem in 2018, but has been accused of failing to act. In late 2021 and early 2022, things still didn’t go well.
This would violate section 108A of the Pension Industry Act, which requires superfunds to identify and consolidate multiple accounts.
This could be the biggest challenge to superfunds since mandatory retirement pensions began in 1992 under the Labor government.
The retirement savings giant has been accused of fraud in 2019 and 2023 after becoming aware of the problem, and Australian Super is also a certified default product under the federal government’s MySuper programme.
Australian Super admitted wrongdoing and apologized to its members.
“AustralianSuper regrets that the process of identifying and combining multiple accounts did not cover all instances of multiple member accounts,” it said in a statement on Friday.
“This kind of thing should not happen, and I sincerely apologize to all the members.”
AustralianSuper has ties to trade unions and the Labor Party, and cabinet minister and former opposition leader Bill Shorten was on the board from 1998 to 2007 before entering politics.
Ironically, the former Australian supermarket News Corp Business Daily CEO of the Year Awards 2019 named him CEO Ian Silk after recently retired Qantas CEO Alan Joyce .
‘“It’s great to see Ian’s leadership recognized as we work to provide Australia’s largest superannuation fund with the best possible retirement benefits for its more than 2.2 million members.” Ta.
“Congratulations to Qantas’ Alan Joyce for taking the top spot.”
ASIC Vice Chairman Sarah Court said failure to consolidate multiple accounts into one would hurt customers reaching retirement age.
“Failure to consolidate duplicate accounts within the fund could have a significant financial impact on members paying multiple fees and could erode superannuation balances over time,” he said. Stated.
The lawsuit against AustralianSuper is the first lawsuit filed by ASIC with the Australian Prudential Regulatory Authority (Superannuation and Banking Regulator). The Superannuation Industry (Supervision) Act came into force in 1993.
Australian Super self-reported to ASIC in December 2022 that it may fail to consolidate duplicate accounts, prompting corporate regulators to review fiduciary practices.
Australian Super boasts on its website that it wants customers to maximize their retirement savings.
“As Australia’s largest superfund, we play a key role in helping all Australians achieve the best possible financial position in retirement,” the charity said.
Australian Super also claims to work to support reconciliation and retirement savings for Aboriginal and Torres Strait Islander people.
“We recognize that the current pension system still has a way to go to achieve this and that there are barriers for many Aboriginal and Torres Strait Islander people,” the report said.
The mandatory superannuation contribution guarantee rose by 0.5 percentage points to 11 percent on July 1 and continues to increase by 0.5 percentage points each year until reaching 12 percent in July 2025.
AustralianSuper was fifth in the 2022-23 SuperRating passive balanced options top performing league table behind HESTA, Rest, Hostplus and Brighter Super.
It is a member of Industry Superfunds, union-backed retirement savings for workers in specific industries.