Greater independence needed

The Australian Financial Review has reported that 140 new independent directors and up to 40 chairs will change under the draft legislation released by the Federal Government affecting not-for-profit (NFP) superannuation funds.

The retail funds already require that their boards have a majority of independent directors and an independent chair.

The NFP funds have countered that the returns to their members have been superior to for-profit funds and their mandate of “member interests first” would indicate quite strongly that the current governance system is working well. They point to the fact that according to the latest SuperRatings Fund Crediting Rate Survey all but one of the 20 top-performing funds over the last decade are NFP funds.

Potential independent directors and chairs will of course need to ensure that they can be confident of maintaining this level of performance.

The Australian Institute of Company Directors (AICD) has noted that short-term fund returns are not the only measure of good governance.

“Good governance provides for the long-term stability, sustainability and profitability of an entity. It should give investors the confidence that their assets are not just safely managed today but will be able to generate a steady, reliable income stream as they retire in the decades ahead,” commented John Brogden, CEO of the AICD.