AustralianSuper: Australia’s biggest superannuation fund is hit with massive bombshell
The corporate regulator is taking legal action against Australia’s biggest superannuation fund – accusing it of engaging in practices that could diminish retirement savings over a 10-year period.
The Australian Securities and Investments Commission has accused of AustralianSuper, the trustee of Australia’s largest super fund, of failing to identify members with multiple accounts.
Those with several accounts up end paying account-keeping fees multiple times, which ultimately diminishes retirement savings by the time someone can access the age pension at 67.
ASIC alleges 90,000 AustralianSuper members were affected between July 1, 2013 and March 31, 2023, collectively costing them $69million.
AustralianSuper, which has almost three million members, is accused of becoming aware of the issue in 2018 but failing to act until late 2021 and early 2022, and even then doing a poor job.
This would contravene Section 108A of the Superannuation Industry Act requiring super funds to identify and merge multiple accounts.
The retirement savings giant is accused of malpractice from 2019 and 2023 after becoming aware of the issue.
This is potentially shaping up as the biggest test case against a super fund since compulsory superannuation debuted in 1992.
ASIC deputy chair Sarah Court said a failure to merge multiple accounts into one would hurt clients at retirement age.
‘Failing to merge duplicate accounts within a fund can have significant financial consequences for members who end up paying multiple sets of fees, eroding their superannuation balance over time,’ she said.
The case against AustralianSuper is ASIC’s first with the Australian Prudential Regulation Authority – the superannuation and banking regulator – since the Superannuation Industry (Supervision) Act came into effect in 1993.
AustralianSuper in December 2022 self reported to ASIC a potential failure to consolidate duplicate accounts, leading the corporate regulator to review its trustee practices.
On its website, AustralianSuper boasts about wanting its clients to have the maximum retirement savings.
‘As Australia’s largest super fund, we have a key role to play in supporting all Australians to achieve their best financial position in retirement,’ it said.
AustralianSuper also claims it is committed to reconciliation and helping Aboriginal and Torres Strait Islanders with their retirement savings.
‘We recognise the current superannuation system has some way to go to achieve this and barriers exist for many Aboriginal and Torres Strait Islander peoples,’ it said.
The compulsory superannuation contribution guaranteed rose by half a percentage point to 11 per cent on July 1 and is increasing annually until reaching 12 per cent in July 2025.
AustralianSuper was fifth on SuperRating’s league table of the top-performing passive balanced options in 2022-23, behind HESTA, Rest, Hostplus and Brighter Super.