Speaking to the Australian Shareholders Association (ASA), Ms Hume warned that the Your Future, Your Super reforms would “put beyond doubt” that trustees must act in the best financial interests of members.
“I am not saying that direct investments in airports, social housing or energy generation are inappropriate – far from it. We also know that there is an illiquidity premium that comes with large scale direct infrastructure investment which can add great value to a portfolio,” Ms Hume said.
“But to invest in these things for any reason other than the best financial interests of members – even if it’s to improve the economy or create jobs – is a breach of obligations to members who have entrusted trustees to have one overarching objective – their best financial interests.”
The reforms will also require funds to disclose executive remuneration, political donations, marketing spend, and other expenses that have previously drawn the ire of government and regulators – including sporting sponsorships and external entertainment such as Hostplus’ now-infamous Australian Open cash splash.
“The Productivity Commission’s landmark report on the superannuation system lamented this lack of transparency, speaking at length of the ‘yawning gaps’ in superannuation data,” Ms Hume said.
“In a compulsory system, this is not good enough. A system which automatically receives almost one in every 10 dollars earnt by Australians must be held to highest standards of transparency. People should be able to see exactly where that money is being invested and where every cent of their compulsory superannuation savings are being spent.”
Ms Hume also stood firm on the issue of benchmarking, which a number of fund executives have warned could create unintended consequences for members, noting that 21 out of 77 MySuper products had already underperformed their own benchmark by more than 0.5 percentage points.
“Being in a poorly performing fund can have a significant impact on how much super Australians have when they retire,” Ms Hume said.
“That is why the Morrison government wants – and expects – the superannuation system to deliver more for Australians.”
