How Australia's super fund of the year spends hundreds of thousands of dollars on entertaining

Roger Federer winning the 2018 Australian Open men’s singles final.
  • Hostplus, Australia’s best performing super fund, spent $260,000 in entertaining at the Australian Open Tennis.
  • And another $40,000 on exclusive Australian rules football tickets.
  • The fund says it’s all about building relationship with employers to ensure the fund keeps members.

The financial services royal commission today opened a window into the world of corporate entertaining at superannuation funds, said to be a necessary expense to maintain membership numbers.

Hosptplus, named Australia’s best performing superannuation growth fund, has revealed in the financial services royal commission some of the hundreds of thousands of dollars it spends on corporate entertaining.

CEO David Elia, being questioned by counsel assisting the commission, said the fund spent $260,000 on entertaining 120 employers at the Australian Open Tennis this year.

Then there was the $40,000 for AFL Medallion Club tickets to Etihad stadium.

“It is a competitive market out there,” he told the commission. “Our competitors are doing the exactly same thing.”

The employers at the tennis represented $4 billion in member funds. Hostplus has 1.1 million members and $34 billion under management.

“Hostplus loses … $500 million a year to rollovers out to underperforming funds, high-cost funds,” he says.

“I sit there every day and think why does this happen? If it was a rational market Hostplus should be 10 times the size of AMP.”

The battle is all about retention of default fund status, he says.

According to industry analysts Chant West, Hostplus, returned 12.5% in the 2018 financial year, taking the top spot for the best performing growth fund for the second year in a row.

Elia was also questioned about Australian Open tickets for his family and the use of frequent flyer points gained through business spending.

He stopped collecting frequent flyer points from the company charge card following an anonymous complaint by a whistleblower

He was asked if the corporate entertainment was a potential breach of Corporations Act by providing goods or services to an employer on the condition their employees become members of the fund?

Elia says corporate entertainment is not provided on the condition employer members join the fund but is one many things, such as information sessions and investment forums, used to engage with employers.

“It’s not an inducement,” he says.

Hostplus is in the top 10 when it comes to paying its trustees/directors. Data form the prudential regulator APRA shows its directors, who meet seven times a year, getting a combined $1,015,000 a year.

The fund has nine directors, with a combination of employer representatives, unions and independents: Three nominated by the Australian Hotels Association (AHA), three nominated by United Voice, and three independent directors jointly selected by the AHA and United Voice.

Among the independent directors are former National Party MP and Deputy Prime Minister, Mark Vaile, and Peter Collins, a former NSW Opposition leader and Liberal Leader.

The 2017 annual report shows that the chair, David Elmslie, received $165,695, Peter Collins $126,443 and Mark Vaille $97,060.

The three union appointees got between $45,139 and $56,618.

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