Make superannuation fund boards more transparent

Superannuation funds should be subject to the same corporate governance requirements as publicly listed companies.

That is the bottom line of a round-table exercise conducted last week by Money Management’s sister publication, Super Review, with most panellists agreeing there needed to be changes to the regulations impacting superannuation fund trustee boards to place them on a similar footing to the boards of publicly listed companies.

Mercer global partner Russell Mason (who is soon to take up a senior role at Deloitte) said irrespective of whether they were corporate, commercial, retail or industry funds, they were very large financial institutions.

“They’re massive financial institutions [controlling] many, many billions of dollars,” he said. “And they should be subject to the same governance as a publicly listed company.”

Mason said there was a need to view members of superannuation funds as having equal rights with shareholders.

The round-table panel also emerged in broad agreement that the rules around the make-up of trustees boards needed to be reviewed, particularly with respect to people holding positions on multiple funds or companies providing services to funds.

Association of Superannuation Funds of Australia (ASFA) policy general manager David Grause said an appropriate outcome could be achieved by making suitable changes to the rules.

“You know, there’s nothing to say that the trustee structure is a problem, and there’s nothing to say that any of those rules to a public company couldn’t get applied to a trustee acting in the current role,” he said. “They could force annual general meetings, they could force greater disclosure.

“So I don’t believe that the actual structure is a problem here, it’s actually just rules and regulations around it,” Grause said.

Sunsuper chief investment officer David Hartley said he could also see some issues arising in circumstances where people were sitting on multiple boards.

MetLife chief marketing and distribution officer Eric Reisenwitz said the starting point with respect to the trustee boards of superannuation funds was that the directors needed to put members’ interests first.

“At the end of the day, I think the structuring of itself, whether you add more rules, take more rules away, obviously you need to have things like conflict of interest, and it has to go back and forth there, but you can’t take it away from a global understanding that the members’ interests are primary,” he said.

Mason pointed out that while there had been much discussion around the issue, there had been very few problems with respect to superannuation fund trustee boards.

“Let’s remember that, overall, the current structure of not-for-profit, for industry funds, has worked well,” Mason said.

“There’s been a couple of noticeable cases where there have been major problems on the board, and very publicly the regulator APRA had to step in,” he said. “There have been many other cases where APRA has very quietly stepped in and resolved a problem, but we haven’t seen the collapse of any industry funds.

“You would have to acknowledge I think overall that most of them, the vast majority, have been well managed and well run,” Mason said.