Energy Super chair Scott Wilson told the royal commission on Friday of how a potential merger between Energy Super and Equip Super was scuppered due to conflicts over board make-up.
The benefits of this merger for members could have been as much as $20.5 million, KPMG analysis found. It also could have delivered savings for members of up to 0.15 per cent through enhanced scale.
However, Energy Super required a board featuring union representatives, while Equip Super preferred to build a “skills-based board” made up of member and employer representatives, with the remaining third determined through a skills test.
Speaking to the commission, Mr Wilson said he believed from the start the merger wouldn’t get across the line due to Equip Super’s sentiment towards union-nominated directors.
Ultimately, Energy Super and Equip Super reached a stalemate; the merger would only go forward provided Equip Super allowed the board to feature union-nominated directors.
Questioned on whether this barrier protected or damaged members’ best interests, Mr Wilson said the interests of super members and unions are “indistinguishable”.
“What do unions do around superannuation? We won it. We won it in the '80s through awards. So superannuation is very, very important to unions,” Mr Wilson said.
“It just so happens when we talk about superannuation funds that the interests of unions and the interests of members of the funds are so aligned as to be indistinguishable. It’s what we do.
“We look after members’ money through the accumulation and into retirement. If we can’t be guaranteed that an anti-union employer-based fund is going to allow to have union representation on their board going forward, what’s going to happen to our members in far north Queensland, what’s going to happen to our members in Cairns and Townsville? Who is going to service them?”
Equip Super went on to merge with the former Rio Tinto Staff Superannuation Fund. According to an Equip Super statement, this merger has reduced member fees and premiums by $12 million.
Nest Egg’s ongoing coverage of the royal commission continues here.