If superannuation is so super, why are most of us in the dark?

LIKE many Australians, I care enough about my financial wellbeing that I don’t have a clue what 99.9 per cent of my super fund documentation actually means when it arrives with a thud at the end of each financial year.

The latest statement carries a figure right at the back that’s my super fund account balance. The figure also features in big bold numerals at the start and at regular intervals over the following 20 pages. It appears in a couple of graphs as well, just in case I want a schematic representation of more than 15 years of activities that have occurred with my complicity, but also my complete ignorance.

Every year when the super fund documents arrive I feel a pang of guilt as I carefully store them in a drawer, unopened - that I don’t have a clue what almost everything but the balance means; that I couldn’t be bothered finding out; that I should care about that kind of thing because, hey, I’m a consumer in a capitalist society and if I shopped around and did my homework I’d almost certainly find a better deal, or so we’re told; and because I’m lazy.

Every year when the super fund documents arrive I feel a pang of guilt as I carefully store them in a drawer, unopened.

I’m too lazy to be the kind of informed consumer that our pro-choice superannuation system requires. And so I’ve remained parked in a retail superannuation fund that’s one of a number listed to appear at the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry over the next couple of weeks.

At least I’m not alone. In a straw poll of 20 regulars having coffee at my son’s cafe on Wednesday, 20 out of 20 people admitted to being like me – in a super fund that was recommended when they started work years ago, ignorant of what the vast majority of their super fund documentation means, and feeling guilty that they don’t do anything about it.

The royal commission this week has provided a little relief though.

Even if we wanted to, and despite glossy super fund advertising promises of carefree retirements under sunny skies and with our golden retrievers at our sides, it’s not easy to be an informed consumer dealing with the $2.6 trillion superannuation industry.

As counsel assisting the royal commission, Michael Hodge QC, put it early this week: “Consumers are unable to do anything more than peer dimly through the darkness of their superannuation trustee.”

“What happens when we leave these trustees alone in the dark with our money?” he said, before carving up the first of a few of them for “misconduct” that your average Australian would probably more accurately label “highway robbery”.

It started with a bank keeping too quiet for way too long about a “fees-for-no-service” superannuation arrangement requiring $120 million in customer refunds, and then arguing - successfully – for a significantly watered-down regulatory response.

It included examples of superannuation accounts where fees almost equalled contributions, or default insurance schemes that in one case gouged an extraordinary $774 a fortnight in income protection premiums without the customer’s knowledge.

It’s already clear the Australian Securities and Investments Commission (ASIC) and the Australian Prudential Regulation Authority (APRA) are in for a beating.

Back in 1997 a financial system inquiry envisaged an Australian compulsory superannuation system with “the necessary regulatory protections in the market place” to protect consumers who would be “treated as rational and informed investors”.

Like too many reforms from that period, it dumped too much responsibility on “consumers” to negotiate deliberately complex and opaque, but mandatory, financial processes, and put too much faith in regulators during an era when “regulation” was almost a dirty word.

It was no surprise to learn this week that ASIC spent taxpayer funds on a strategy to manage the message from the royal commission and counter negative publicity. The strategy included contesting daily media reporting via “backgrounding reporters, briefing commentators, persuading editors”.

In common parlance that can also be called white-anting. Organisations with something to hide tend to make an art form of it.

And ASIC and APRA almost certainly have problems they would prefer to keep hidden from the public gaze.

For years Fairfax Media – publisher of this newspaper – battled regulators, the banking industry and governments to expose the rot in Australia’s financial industry and the devastating impacts on Australians. Whistleblowers were white-anted, and worse. Fairfax journalists were criticised.

Anyone who’s jumped on the “Fake news” bandwagon needs to remind themselves that this royal commission – as time-restricted and compressed as it is – is only occurring because of the media backing individuals on the receiving end of appalling financial abuses of power, while regulators failed.

A Productivity Commission superannuation report released last week found one in four super funds persistently underperform in a system Australians have no choice but to contribute to, yet APRA has allowed this to go on. The commission found quality performance data is unavailable and, even worse, that an APRA internal division that compiled fund data was abolished in 2010.

I sit in courts on a fairly regular basis and it often strikes me how differently we view acts where a person or people deprive others of things they’re not entitled to.

In a Queensland court case in 2016 – right when a major bank was arguing with ASIC over the superannuation “flaws” that dudded Australians of $120 million – a man was sentenced to nine years’ jail for robbing a bank of $10,000. He carried a toy gun, although no-one saw it, and threatened to shoot terrified bank staff. The judge who sentenced him acknowledged his “tragic early life”, but to jail he went.

A man robbing a bank is a crime. But bank executives deliberately taking people’s money because they can is “misconduct”. How about we start calling it what it is and, more importantly, prosecuting those responsible.

This story Joanne McCarthy: You can bank on it first appeared on Newcastle Herald.