Banks are offering businesses discounts and “deals to bundle business banking services” in an effort to become the default superannuation fund for employees.
Of 550 small and medium sized businesses surveyed, more than a quarter of employers said a major bank had approached them about transferring superannuation to the bank’s own retail super fund in the last year. Just under half of these propositions to switch funds were said to be sweetened with business-related benefits.
The research, undertaken by UMR and reported by Industry Super Australia, said the most common offers made by the banks involved a direct benefit to the business rather than employees, such as discounts on business banking and insurance products. Some employers report being offered tickets to sporting events.
About a third of employers offered benefits by banks say they were persuaded to switch super funds and more than half report they are still considering a change. The Superannuation Industry Act 1993 states the trustee of a regulated super fund must not “offer to give or allow a discount, allowance, rebate or credit” to gain business.
David Whiteley, chief executive of Industry Super Australia, says the research gives rise to serious questions about the banks’ behaviour.
“This could result in employees’ super contributions being paid into bank-owned super funds, which have on average historically produced lower net returns to their members,” he said.
“In the best interests of employees, the law should be changed to prohibit a bank-owned super fund from providing default super services where it is also the provider of business banking services to the employer.
“The research also reinforces the need for Australia’s super system to provide employers with a strong safety net of high performing funds to choose from, which have been assessed for quality by the Fair Work Commission.”
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