Superannuation fund executives are collectively raking in millions, but new data from the super fund regulatory body reveals underperformance is rife in the industry.
Twelve superannuation executives are earning over $1 million, with UniSuper’s chief investment officer, John Pearce, topping the ranks at $1.7 million, according to the AFR’s latest pay data.
The 50 highest-earning super fund executives received, on average, a 7.5 per cent pay rise this year - and collectively took home $36 million.
But while executives are taking home millions, the Australian Prudential Regulation Authority’s (APRA) latest super fund heatmap data revealed areas of underperformance in the default super product, MySuper, were evident across all segments of the industry.
The APRA data, which analysed fund fees and performance of 263 MySuper products across three and five years found over one-in-four (or 28 per cent) underperformed relative to the trend line (the average) by 0.25 per cent or more.
And members weren’t just getting rorted on performance - fees were put under the spotlight too.
For example, Goldman Sachs was charging 4.37 per cent on a $10,000 account balance, while First Super’s MySuper was charging 3.02 per cent.
Interestingly, higher-paid chief investment officers were linked to higher-performing funds, OpenDirector founder Donald Hellyer told the AFR.
And while they’re reaping seven-figure salaries, only a portion of the executives’ remuneration is allocated to oversee the super.
The data revealed ANZ’s onePath executive, Alexis George, earned $2.2 million, but was only allocated $408,000 for her superannuation role.
Equally, BT CIO Brad Cooper made $4.1 million this year, but was only allocated $80,000 to oversee the superannuation funds.
It’s a far cry from other CEOs of ASX100 companies who rake in million-dollar bonuses on top of their actual salaries.
In fact, the median bonus awarded to an ASX100 CEO in the 2018-19 financial year was $1.61 million - the second-highest sum in the 18 years the Australian Council of Superannuation Investors has been monitoring bonuses.
Out of all eligible CEOs, only one - Domino’s Don Meij - did not receive a bonus in the 2018-1 financial year, despite a Royal Commission into the financial services sector which revealed systemic leadership failures.
“These payments occurred in a year when the Royal Commission was in full swing, revealing evidence that executives were not being held accountable for poor conduct, and in the wake of soaring ‘first strike’ votes against remuneration reports,” ACSI CEO Louise Davidson stated.
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