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Former Labor health minister and attorney-general Nicola Roxon will chair a new superannuation policy and lobby group expected to be dominated by Labor party and industry super heavyweights.
The new body, named the Super Members Council of Australia (SMC), combines two industry bodies – Industry Super Australia and Australian Institute of Superannuation Trustees – and establishes a new “big eight” group of funds that will dominate the $3.5 trillion system.
As first reported in The Australian Financial Review, those eight funds – AustralianSuper, Cbus, HESTA, Hostplus, Aware Super, ART and REST – drove the merger of the two groups and will each get a seat on the final board.
The funds selected Ms Roxon, who chairs HESTA, as interim chairwoman last week pending a formal selection process when the final board is determined.
There are five more spots on the board yet to be filled, which will include three representatives of small-to-medium profit-to-member funds and two non-voting directors from the Australian Council of Trade Unions and employer groups.
The SMC’s formation comes as non-profit super funds emerge as the leaders of the mammoth retirement industry and a key force in shaping politics and capital markets after several high-profile mergers and ructions with retail funds.
The marriage of the more politically and union-aligned AustralianSuper, Cbus, HESTA, REST and Hostplus with the historically less Labor-linked UniSuper, Aware and ART also indicates that big super is becoming a powerful unified block.
The SMC will have significant lobbying power to government and industry, given that it will represent more than $1.4 trillion in the retirement savings of more than 10 million people.
Ms Roxon said the group would engage with all political parties and levels of government and industry to advocate for “stable, effective and equitable” superannuation policy.
“The nature of work and the workforce itself are changing, as are patterns and expectations in retirement. As many members’ balances grow, those in lower paid or less secure work risk being left behind,” she said.
“Our promise is member-centric advocacy that seeks to work with all political parties to deliver the best possible retirement outcomes for the millions of Australians we represent.”
The Financial Review understands that the ISA and AIST merger process was rocky at the start, with the big eight funds flexing their muscle to shape the new organisation.
The ACTU and employer non-voting board seats were granted in part to quell their disquiet over this, while the three seats for smaller funds partly compensate for the fact the merger diminishes their power.
They had more influence in the AIST, which has four times as many members as ISA including several not-for-profit but non-industry linked funds such as State Super and Super SA, but will now fold under the deal.
In addition to consolidating power, the SMC’s creation was driven by funds trying to cut down costs that are not directly linked to investments amid greater parliamentary and regulatory scrutiny of whether all their decisions are made in members’ best financial interests. Doubling up on memberships to industry groups such as ISA and AIST is one such cost.
The SMC will be operational from October 1 and is currently recruiting an inaugural CEO.
