Retail superannuation needs better disclosure: ISN
Although the recent public debate around transparency in superannuation funds has focused on industry funds, it is the opaque governance structure of most major retail super funds and that diminishes the value of members' savings, according to the Industry Super Network (ISN).
"Currently four of the five largest retail funds do not make readily available to members or the public the names of board members, the fees they draw as board members nor the salaries they earn as executives (as many directors of retail funds are full-time executives of parent or related entities)," the ISN stated.
These retail funds do not disclose the arrangements struck between the fund and parent company, even though these payments are, on average, two-and-a-half times the market rates, the ISN stated.
The ISN said many of the assertions suggesting the need for greater transparency actually have little or no connection to industry super funds.
"Seemingly every public matter raised about a union, employer association or super fund is used to advocate the need for industry super funds to be more transparent and adopt a new governance model," the ISN stated.
Industry super funds do need to improve disclosure to members and there is more that can be done above recent Australian Prudential Regulation Authority standards, it said.
"In coming months many industry super funds will introduce a transparency regime that will set a standard that retail funds will inevitably fail to meet," the ISN stated.
According to the ISN this is predictable because of a "profound philosophical difference" whereby industry funds are governed by trustee directors appointed by employer associations and unions determined to deliver superior net returns to members.
The resulting opposition to industry super funds is driven by the "competitive threat" they present to major banks and the fact industry funds challenge the practices of the banks' retail funds, which the ISN said compromise member returns to generate shareholder profits.
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