This was published 8 years ago
Super funds should be forced to reveal their investments
By John Collett
Super fund members have a right to know what their funds are doing with their retirement savings.
But a survey of the disclosure of the 50 largest super funds by Market Forces, an affiliate of Friends of the Earth, found 83 per cent of assets under management are not disclosed.
Super fund members are entitled to know where their funds are investing.Credit: Paul Jones
Of the 50 funds, 19 provided zero transparency of their portfolio holdings.
Energy Super is the only fund to disclose its whole portfolio. Hostplus, Cbus and VicSuper disclose more than 50 per cent.
Without knowing the portfolio holdings, how do you tell if your fund is investing in the types of industries and companies that you want to be invested in?
Most mainstream funds, if they do disclose, tend to give only the top 20 Australian share holdings.
The intent of government is that funds should disclose their portfolio holdings on their websites.
However, the relevant legislation was put on hold due to the federal election.
The government appears to be giving priority to getting its superannuation tax reform package through Parliament.
The commencement date for portfolio disclosure has been delayed again, to mid-2017, but that's assuming the relevant legislation is passed.
Some funds and their lobby groups continue to resist the notion that they should have to disclose. They claim listing portfolio holdings is expensive and fund members would pay for it through higher fees.
While there would be some costs initially, it's hard to believe that the costs could be that high.
Funds employ dozens of fund managers to make investments on their behalf and it is true that can add up to thousands of investments.
But the government has met their concerns by limiting disclosure to those investments held by the fund directly and associated entities, rather than all assets on the "look-through" basis.
Then there's the patronising argument that fund members would nevertheless be subjected to reams of disclosure that would only confuse them.
Others claim that forcing them to disclose allows rival funds and self-managed super fund trustees to copy how they invest.
Disclosures are likely to already be somewhat out of date by the time they are made, given the lags that are inherent in the process.
The funds' intellectual property is likely going to be protected.
Some funds argue that most members are not interested in portfolio holdings.
However, a poll of fund members commissioned by Market Forces found a third said they would be prepared to switch their super to another fund if their fund was found to be investing in coal or coal seam gas extraction.
The disclosure would be used by activist groups, such as Market Forces, to put pressure on funds to lower their exposure to fossil fuel investments. But if the funds have to argue the case for holding the investments, then so be it.
Twitter: @jcollett_money