Senator Jane Hume is cracking down on how superannuation funds spend members' money and subjecting them to the same stringent reporting and disclosure requirements as publicly-listed companies.
The Minister for Superannuation, Financials Services and Financial Technology told the recent Australian Shareholders Association Investor Conference that the federal government's package of new reforms will stamp out widespread underperformance, complex arrangements and lack of transparency that have gone on for far too long.
Similar to an ASX-listed company, super funds are now required to disclose the remuneration of key executives and "highly paid investment managers, in the same way that we expect ASX-listed companies to disclose this information to shareholders", she said.
Providing detailed information about super funds' expenditure, donations to political parties, peak bodies and affiliates like unions, marketing expenditures, sporting sponsorships and entertainment, are the many areas super funds must be upfront about.
"[This is] where we want trustees to be thinking long and hard about whether there's a tangible financial return to members before they spend other peoples' money," she said.
These disclosures will work in conjunction with APRA's Member Outcomes legislation that was introduced in 2017.
Hume went on to highlight the benefits of the upcoming Your Future, Your Super reforms, which is estimated to save members $17.9 billion over 10 years.
"It is a package that will encourage competition between funds, remove unnecessary waste built into the system, and improve standards so funds can focus on delivering better performance and minimise unnecessary expenditure," she said.
From 1 July 2021, employers cannot default new staff to their chosen super if employees do not nominate a fund or provide any details. Instead, employers will obtain such information directly from the ATO so superannuation will continue to be paid into employees' existing fund.
"While many Australians have benefitted greatly from the system and been provided a higher standard of living in retirement, widespread underperformance, complex arrangements, and a lack of transparency have undermined outcomes for too many," Hume said.
About 1.6 million people change jobs every year and 470,000 enter the workforce for the first time. Consequently, some 850,000 new duplicate accounts are created every year.
"For too long, superannuation fund members have not been able to get clear answers to a couple of simple question: What are they doing with my money? Where is invested, and where is it spent?" she said.
"They are questions that deserve answers."