Industry super fund model is under threat: ISA
The industry super funds peak body, Industry Super Australia, has accused the Federal Government of threatening the business models of not-for-profit superannuation providers.
In its formal response to the government’s draft legislation for overhauling governance in the superannuation industry, the ISA argues that the proposed reforms would remove the requirement for member and employer representatives on super fund boards.
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ISA CEO David Whiteley says changes could threaten member returns.
ISA chief executive David Whiteley said the proposed laws would also allow boards of many retail funds to comprise a majority of bank-appointed executives.
“The proposals abolish the successful not-for-profit trustee model and, astoundingly, dilute the governance obligations of the poorer performing retail and bank-owned super funds,” he said.
“It suggests the government does not understand that not-for-profit super funds, including industry super funds, deliberately operate in a different way from for-profit funds.
“This difference in culture and profit orientation, overseen by boards that give members and employers a strong voice, has been fundamental in delivering higher returns to millions of members of not-for-profit funds for nearly two decades.”
Retail super funds that are affiliated with the Financial Services Council are supporting the legislation.
Since 2013 all super funds affiliated with the FSC have agreed to a voluntary code of conduct that requires them to appoint a majority of independent directors and an independent chairperson.
“Independent directors on trustee boards, appointed using a strong definition of independence, will ensure that the interests of consumers are put ahead of the interests of shareholders or a sponsoring organization,” said FSC chief executive, Sally Loane.
Assistant Treasurer Josh Frydenberg announced details of the government’s reforms on June 26.
Under the planned changes, all super funds will be required to appoint independent chairpersons and have at least one third of their boards assessed as independent directors.
If the draft legislation is passed by federal parliament, super funds will be given three years to comply with the new rules.
DISCLOSURE: The New Daily is owned by industry super funds including AustralianSuper and Cbus, which also have an interest in ISA.