Super Scams

Bosses clawing back super surplus or refusing to pay death benefits to widows? Are these just confined to the 'bad old days'?

The Australian Securities and Investments Commission recently surveyed advice provided to clients about changing super funds with the advent of 'choice' and found some worrying trends - widespread incidents of advisors on commission recommending a switch without disclosing the costs and loss of benefits that went with it and so-called independent advisors recommending funds they had links with.

In a damning report released in April this year the commission found around a third of financial advice telling members to switch super funds was not in the member's interest and half were on kickbacks.

In one case a 30-year-old worker had his projected retirement saving cut 38 per cent from $355,000 to $220,000 because of higher fees. (AFR 7/4/06)

Deregulation of the superannuation market may open the way for the sort of rorts that plagued the industry last century.

Shell Shocked

One of the biggest scams involved Dutch-based multinational oil company Shell. At stake was half a billion dollars in superannuation funds which the company attempted to claw back and transfer into its own coffers. The Australian Manufacturing Workers' Union fought Shell all the way to the High Court.

The dispute arose in September 1990 when Shell offered its 4,800 employees cash incentives of up to $30,000 to transfer to its new defined benefits super scheme.

It was not until much later that people read past the dollar signs and realised that the company was running off with a half a billion dollars in surplus.

Scandals like these made headlines. "Superannuation scams have become the biggest company rort of the century," The Metal Worker reported in August 1991. "Bosses are plotting ways to steal billions of dollars of workers' money".

An ABC TV Four Corners expose of the rorts did not hesitate to offer some sound advice -- industry funds, where the workers have a say through their trade union on how the fund operates, are by far the safest bet.