Greater super fund transparency welcome but more reform needed, say directors
- Date:27 Apr 2012
- Type:Media Release
The Australian Institute of Company Directors welcomed draft Federal Government legislation making the governance of superannuation funds more transparent, but said more reform was needed.
These reforms should include giving industry superannuation funds the ability to replace employer and union representatives on their boards with independent directors.
Under the draft legislation announced by the Minister For Financial Services and Superannuation, Bill Shorten, there will be new requirements for funds to disclose the details of the remuneration of directors, senior executives and trustees, bringing superannuation funds into line with those already placed on listed companies under the Corporations Act.
“This is consistent with the previous calls by Company Directors for the governance standards and legislation applying to ASX listed companies to be also applicable, to the extent possible, to superannuation funds,” said the Chairman of the Australian Institute of Company Directors, Richard Lee.
Company Directors also welcomed other requirements for funds to publish a wider range of information on their operations and financial performance, including the names of outsourced service providers, the name and biographical details of each director or trustee, the details of board meeting attendance by directors and the fund’s proxy voting policies and procedures, as well as voting behaviour.
“Company Directors supports the introduction of appropriate new measures to ensure greater accountability of superannuation fund directors and trustees and to promote robust governance standards for the superannuation industry,” Mr Lee said.
“A high level of transparency is an important part of good governance, helping to ensure confidence, structures and practices that create better outcomes. The greater transparency and easier availability of information for fund members required under the draft legislation is a good step in this direction,” Lee said.
However, Company Directors said more needed to be done to improve governance in the sector, including the appointment of “non-aligned” independent directors to superannuation fund boards.
“Good governance underpins the confidence that we all, as superannuation contributors, need to have in the operation of superannuation funds. It improves decision making and accountability, which in the longer term results in better financial performance by the funds,” Mr Lee said.
“A key aspect of good governance is the make-up of a board. When putting together an effective board you need a variety of skills, knowledge and experience. Industry superannuation funds should have the ability to boost members' confidence by appointing independent members to their boards. This will ensure they have the necessary skills and experience to have a high-performing trustee board,” Lee said.
“A recommendation made by the Cooper review of the superannuation fund sector that one-third of board seats be filled by independent directors does not go far enough to grant individual funds the ability to increase the presence of independent directors to the same extent as other sectors, such as retail schemes.”
“The ASX Corporate Governance Principles are a good starting point, on a non-mandatory ‘if not, why not’ basis, with some modification to ensure that they appropriately fit the superannuation industry,” he said.
Company Directors noted that the Minister said he would be holding further discussions with key stakeholders on how to further improve transparency and governance in the superannuation industry, and urged him to consider ways to increase the number of independent directors on superannuation boards.
Company Directors also noted that the Australian Prudential Regulation Authority (APRA) has also today released its response to submissions on the implementation of prudential standards for the superannuation industry, as well as 11 draft prudential standards.
APRA’s guidance material on director independence is still to be released and Company Directors looks forward to considering how APRA will seek to ensure that superannuation funds include independent directors on their boards.
For further details please contact:
Steve Burrell, General Manager, Communications, 0407 708 485
Michelle Wood, Media and Government Relations Advisor, 0466 655 115
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