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EISS chief resigns after super fund hit by toxic culture, spending allegations

EISS has sponsorship deals with two separate Maroubra surf clubs, which is the suburb neighbouring Mr Hutchison’s personal residence.

“There is supposed to be a process that clubs follow,” said one source. “More than half of the sponsorships, Alex Hutchison specifically told the community engagement team, we’re sponsoring this club, have the agreement drawn up.”

Federal government reforms introduced this year enforce stricter tests for superannuation fund spending to be in members’ best financial interest. Since these rules came into effect, EISS has not signed any new sponsorship deals. EISS did not respond to questions about the existing deals or APRA’s enquiries on Thursday.

APRA declined to comment. However, deputy chair Helen Rowell said in May the regulator was probing the spending patterns of around 20 funds and threatened punishment for unnecessary sponsorship deals and marketing spending.

Dr Mundy sent an internal email to EISS staff on Thursday morning, following the reports outlining concerns held by former staff around the super fund’s extravagant spending on Christmas parties and overseas trips.

“I make no apology for supporting the professional development of our staff. We must invest in you all to ensure we continue to provide the services that our members want and the law requires,” Dr Mundy’s email, obtained by The Age and Herald, said.

“EISS Super is a fund focused on our members. We have rigorous policies and processes in place to ensure the fund is run in the best interests of members and any suggestion that this has not occurred is simply untrue.”

As well as being chair of EISS, Dr Mundy is on the state executive board of the NSW Labor Party, which was set up to improve its governance, and chairs the national ALP finance, risk and audit committee.

The Age and Sydney Morning Herald revealed on Wednesday EISS was forced to hire external solicitors WorkDynamic to probe bullying complaints against a senior manager made by the fund’s former general manager of people and culture Lisa Elias.

While WorkDynamic found a number of the allegations were unsubstantiated, five former employees, who could not be named because they feared retribution, claimed the investigation was not comprehensive. Ms Elias declined to comment.

But these allegations and others of a toxic work culture and high staff turnover were rejected by the chair.

“At EISS we work hard to provide staff with a supportive and safe workplace. Part of this is providing opportunities for us all to come together to celebrate our achievements. It is disappointing that ex-employees are making these allegations about our workplace which we think are inaccurate and not reflective of the workplace we have built together,” Dr Mundy said in the email to staff.

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Dr Mundy said that no final decision had been made by the boards on the merger but “much progress has been made”. A TWUSUPER spokesman said the fund was exploring the merger because it would scale up the funds, reduce costs and give EISS members access to strong investment performance and focus.

EISS has been on the regulator’s radar since APRA launched its heatmaps initiative two years ago, which flags funds achieving less for their members’ retirement savings. EISS’ investment performance over a five-year period scored the worst possible ranking in both 2019 and 2020.

EISS has returned 17.7 per cent to members over the 12 months to July, benefiting from the post-COVID equities rally. However, the best 20 MySuper funds over the same period returned 22.3 per cent and the bottom 20 averaged 16.7 per cent, according to figures from Rainmaker Information, a financial services research firm.

Now that EISS has failed APRA’s performance test, it has to improve returns, reduce fees or face a ban from accepting new members. New regulations force the fund to send a letter to members by the end of this month informing them of the under-performance.

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