The Teachers Are Blowing Their Whistles!

Subtitle

QSuper returns so far this year are lower than in 2015, but still good compared to other super funds.

QSuper is on track to rank as the top-performing 'growth fund' for the second consecutive financial year.

Independent research house Chant West has found that, as at March 31 2016, QSuper average returns were ahead nearly 3.7 per cent over the previous nine months.

'Growth funds' are defined by Chant West as those with 61 per cent to 80 per cent invested in riskier assets such as shares.

"We made a strategic decision some time ago to focus on long-term returns designed to meet our members' objectives over a 10-year horizon via a diversified portfolio with less equity exposure," QSuper chief executive Michael Pennisi said.

QSuper has roughly 20 per cent less exposure to share markets than the average fund and is more heavily invested in fixed income.

The $58 billion fund topped the Chant West rankings for the financial year ended June 30 2015, with a double-digit return of 12.3 per cent.

 

 

QSuper on track to be top superannuation fund in 2016 financial year, Sally Rose, The Sydney Morning Herald, 19 April 2016

ZZZZZZZZZZZZZZ! Can you hear alarm bells? Is the QIC going to engage in jiggery-pokery with teachers' superannuation savings?

The Queensland Investment Corporation manages public servants' superannuation funds - more than $60 billion in funds.

John Battams was appointed to the board of the QIC in 2015.

This controversial appointment was labelled as "rewards for union mates".

 

Opposition Leader Lawrence Springborg says there is a conflict of interest between John Battams's elevation to president of the Queensland Labor Party and his role as a director of QIC.

"Labor's union bosses are already ... pulling the strings of the Palaszczuk govenment," Mr Springborg said.

"One can only imagine what would happen if they get their hands on public servants' superannuation."

 

 

Public servants need their superannuation money to be invested to get the best dollar return, not to achieve a political goal.

 

 

"John Battams is a man of outstanding integrity and principle who is eminently qualified as a director and chair, having served on numerous boards, " said a Palaszczuk Labor government spokesman. 

"He has many years of experience in the financial sector, including on the boards of Sunsuper, the Queensland Residential tenancies Authority and Teachers Union Health, and is well-respected for his financial and business acumen."

 

Robina Cosser says - But wasn't there a problem with Teachers Union Health a few years ago? 

Didn't the fund lose millions?

Partly it was due to the CEO engaging in some jiggery-pokery, but didn't TUH invest millions in some dud scheme in the USA?

If I remember correctly, after this fracas, the government tried to make a new rule that Health Funds should have qualified people on their boards rather than union officials, but the QTU asked union members to vote against this.

TUH members had to write to TUH and ask for a booklet in order to find out what was really going on and about the lost millions.

You have to wonder if union officers really do have the skills and experience needed to manage $60 billion in public servants' superannuation savings.

 

06-363 Former CEO of Queensland Teachers' Union health fund found guilty on ASIC charges, ASIC, 11 October 2006

"Second pay-off" for new ALP chief John Battams, Michael McKenna, the Australian, 4 March 2016

The Queensland Teachers' Union has given the Queensland Council of Unions $261,840. Why?

The Queensland Teachers Union is the major donor to the Queensland Council of Unions.

Between September 2012 and January 2015, the QTU donated $261,840 to the Queensland Council of Unions, more than any other donor.

 

Why?

How does this benefit QTU members?

 

John Battams, ex-QTU, now Queensland Council of Unions president, has now been appointed as a director of the Queensland Investment Corporation (QIC).

 

 

The QIC manage the Queensland Teachers' defined benefit fund - the fund that Opposition leader Lawrence Springborg says is being manipulated by Labor to fund "jiggery-pokery" (see article below).

 

ZZZZZZZZZZZZZZZZZZ!

Can anybody else hear alarm bells ringing here?

 

Lawrence Springborg described John Battams as a "Labor apparatchik".

"I think many Queenslanders would question his qualifications in an area of financial administration," Mr Springborg said.

 

 

Notice that the QTU's vice-president Sam Pidgeon has also been made a director of SEQWater.

Presumably because of her qualifications in water.

 

 

Or is this a signal that the Queensland Teachers' defined benefit fund is going to be used to buy Seqwater (see article below)?

 

 

Premier Annastacia Palaszczuk accused of stacking boards with Labor sympathisers, Nathan Paull, AAP, The Courier-Mail and The Cairns Post, 28 September 2015

Labor rewards Queensland Teachers Union for campaign support : Opposition, Matt Wordsworth, ABC News, 15 October 2015

 

John Battams gave his approval to the Queensland Teachers' defined benefit fund superannuation "jiggery-pokery".

Queensland Council of Unions boss John Battams has boldly expressed his approval of the Budget's "sleight of hand" over state public service superannuation.

No doubt it would be a different scenario if it had been an LNP government that was the architect of this dubious scheme.

Picture a stony-faced Battams deriding it as an abuse of workers' rights and leading a protest march down George Street.

But not this time.

If hypocrisy were an Olympic event he would be the favourite.

 

 

Denis Condon, Geebung, Letter to the Editor, P.63,The Courier-Mail, 18 July 2015

Industry super funds pay large sums from members' funds to unions when union officials attend board meetings.

Unions have reaped $5.4 million from industry super funds over the past two years by giving high-ranking officials spots on governance boards.

This practice has been slammed as "undesirable by one of Australia's leading financial experts.

The Australian's analysis of fund records shows -

Australian Super paid the ACTU $136,487 from members' funds for Dave Oliver, ACTU national secretary, to attend Australian Super board meetings 2013-1015

Cbus paid the ACTU $106,909 from members' funds for Ged Kearney, ACTU president, to attend Cbus board meetings 2013-15.

(Other examples are given.) 

There are concerns about the suitability of union officials acting as non-executive directors on the boards of multi-million-dollar funds.

"Investment is complex stuff and, if they're to supervise the management of the board, people have to be of sufficient calibre. If they're appointed on representative grounds, you can't guarantee that is the case," said former Future fund chairman David Murray.

He added that, despite recent disclosure rules compelling industry super funds to disclose who receives payment for directorships, members might not realise that the directors were union officials and fees paid for their service went back to the unions.

 

Board fees for unionists cost super funds $5.4m, Elizabeth Colman, The Australian, 14 December 2015

August 2015 - the global stockmarket is in free-fall. Will Curtis Pitt (or John Battams) be around to take responsibility if the Queensland Teachers' defined benefit fund runs out of money?

Queensland Labor government's July 2015 budget documents reveal that treasurer Curtis Pitt is looking at ways to use the Queensland Teachers' defined benefit fund to buy state-owned energy, port and water businesses.

Mr Pitt said this plan would not constitute an asset sale.

The Queensland Teachers' defined benefit fund is managed by Queensland Investment Corporation (QIC), an independent body.

The QIC was established after past Queensland governments gambled the cash on dud investments.

Mr Pitt will have to convince QIC that the state-owned businesses are a good investment.

Or he could change the legislation and take away the QIC's independence.


The Queensland Labor Government is also taking a five-year holiday from investing in the fund.

 

$2 billion dollars that the Queensland Labor government should put into the teachers' defined benefit fund will not be put into the fund.


In July 2016 State Actuary Wayne Cannon confirmed that he had never recommended Labor's $4 billion raid on public servant superannuation.

Damien Frawley, chief of the Queensland Investment Corporation revealed the Labor raid on public servant superannuation would force the QIC to sell assets to raise the $4 billion.

Frawley said QIC would need to sell BHP shares and parts of its infrastructure and real estate portfolios.

"Listed equities, bonds, units in funds of unlisted assets" would be liquidated, Frawley told a parliamentary hearing.


Ernst and Young MD, Paul Laxton, questioned Labor's strategy because the QIC returns were more than the interest bill on the debt.

"You are taking money from an investment by the defined benefit fund with a professional fund manager in QIC deriving effectively an equity return, an investment return,"Laxton said.

"And you are replacing that with paying down (debt), so you are effectively getting a saving in debt costs which is very low, so you are actually going backwards."

 

Opposition Leader Lawrence Springborg said that the Queensland Labor government were engaging in "jiggery-pokery" and that now the Labor government were "stealing from the public servants with their long service leave and also their superannuation entitlements."


"I think if public servants in Queensland knew that a Labor government was going to raid their superannuation and their Long Service Leave entitlements, we may have had a very different outcome five months ago," Mr Springborg said.

 

 

In 2003 Queensland Labor Premier Peter Beattie said that all the earnings from QIC would be re-invested to provide a buffer against periods when the markets were not so strong.

"It is this strategy that is a key to our strong balance sheet."

 

 

PS ... Des Houghton, p 31 The Courier-Mail, 30 July 2016

As good as it gets, Steven Wardill, pp 6-7, The Courier-Mail, 16 July 2015

Queensland government freezes superannuation contributions to save $2 billion over five years, Financial Review, 14 July 2015

August 2015 - the global stockmarket is in free-fall - will QSuper investment managers be asked to pay back the bonuses they were awarded in July 2015? And will our higher investment fees be refunded?

As I write this, on 25 August 2015, the global stock market is in free-fall.

And I am thinking about the letter from Rosemary Vilgan, the CEO of QSuper, on page 2 of the July 2015 edition of Super Scoop.

 

"Giving you good value for money is very important for us. ... What you may not know, however, is that our investment performance and our fees are linked. Essentially, when our investment options perform really strongly, as they have been doing for the last year or two, we pay our investment managers more. This means the investment fee has gone up this year for some of our investment options. ... ."

 

And I am wondering - all of the gains "made" by the QSuper investment options in July have probably been lost now - one month later.

So will the investment managers have to pay back the bonuses they were paid only one month ago?

And will the higher investment fees that we were charged be refunded?

Rosemary Vilgan does not explain what happens when QSuper investment options lose money.

So it seems to me that -

If an investment option makes a 10 per cent gain in (say) July 2015, we pay the investment managers a bonus.

If the investment option makes a 20 per cent loss in July 2016, we pay the investment managers no bonus.

If the investment option makes a 10 per cent gain in July 2017, we pay the investment managers another bonus.

If the investment option makes a 20 per cent loss in July 2018, we pay the investment managers no bonus.

If the investment option makes a 10 per cent gain in 2019, we pay the investment managers another bonus.

 

So it seems to me that QSuper members could go on and on losing money - and paying the QSuper investment managers bonuses and paying higher and higher investment fees.

QSuper seems to have set up a situation where it is to the advantage of the investment managers for the value of our investment options to fall.

I don't suggest that this is any kind of plot - but it seems quite wrong to me.

My feeling is that it would be to QSuper members' advantage to simply pay the QSuper investment managers a regular salary - just like a teacher is paid a regular salary - part of which is paid into a Qsuper account and cannot be withdrawn till retirement - so that the value of the Investment managers' wages will go up and down with the stock market, just like our own QSuper savings.

 

Share turmoil sweeps the globe, with heavy falls on US, Europe markets, Daniel Palmer, The Australian, 25 August 2015

Understanding the wages of QSuper and QInvest employees.

QSuper is the Queensland Government default superannuation fund.

QSuper oversees $59 billion in members' assets.

 

 

QInvest is QSuper's financial planning entity.

QInvest has just 44 advisers to service 540,000 members.

 

 

Each year members pay $18 million for general advice.

But if a member needs individual advice (for example, one phone call), they have to pay another $700.

QSuper members regularly complain that, at the one time in their lives when they really need financial advice, they have to wait months to get an appointment or to receive QInvest advice.

 

QSuper's chief executive for the past 18 years, Rosemary Vilgan, has a base salary of $560,000.

Her short-term bonus is $315,000.

With her long-term incentives and her 12 per cent superannuation, her total salary package is just under $1 million.

(Rosemary Vilgan has outlined her plans to retire in October 2015.)

 

Chief investment officer Brad Holzberg's total package is more than $1.05 million.

 

Chief strategy officer Michael Pennisi earns more than $631,000.

 

Chief advice officer Stephen Cullen has a base salary of $360,000 and is eligible for a short-term bonus of $126,000.

 

QSuper has refused to reveal how its senior officers actually earn their bonuses.

 

 

QSuper top 4 top-up, Renee Viellaris, p.5, The Courier-Mail, 21 September 2014.

QSuper begins hunt for new CEO, Andrew Main, p.21, The Australian,9 July 2015 .

What is a Defined Benefit Superannuation fund?

Before 1986-1992 Queensland teachers had remarkably generous 'Defined Benefit' superannuation.

Queensland teachers had no worry about investment market slumps, inflation or the threat of poverty in their old age.

On retirement teachers would be paid a pension, often set at 60 per cent of their final salary, with automatic adjustment for inflation, and with the pension continuing till the teacher died.

Then it would be paid, at a lower rate, to their surviving spouse.

But when superannuation became compulsory in 1986-1992, 95% of Queensland teachers (I understand) decided to swap over from the Defined Benefit to a Defined Contribution fund.

They face a bigger risk that they will run out of superannuation savings.

Any teacher in a Defined Benefit superannuation fund should stay in that fund.

 

 

Defined super benefits on the way out, Don Stammer, The Australian, 28 September 2011.

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