T H E L E A D I N G I N D E P E N D E N T J O U R N A L FO R T H E S U P E R A N N U AT I O N A N D I N S T I T U T I O N A L F U N D S M A N A G E M E N T I N D U S T RY APRIL 2012
Volume 26 - Issue 3
Trustee boards issue proves divisive 3 SUPER FUNDS Many funds are facing weak organic growth
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ISSN 1324-5295
Why Stronger Super will be 2012’s big challenge
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Photos from Super Review’s annual charity golf day
26 EQUITIES Australian equities still reflect global sentiment For the latest news, visit superreview.com.au MANDATES
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Strong differences have emerged in the superannuation industry about the make-up of trustee boards, with barrister Noel Davis suggesting common standards should apply, writes Mike Taylor
NEWS
• The chair should be independent to ensure, amongst other things, that all relevant issues come before board meetings. • Policy committees have never been an effective means of providing equal representation and are, generally, pointless. Davis’ argument is strongly at odds with those of AIST chief executive Fiona Reynolds, which she expressed both during the recent Conference of Major Superannuation Funds (CMSF) and later during a Super Review roundtable. Reynolds told the roundtable that superannuation funds were different to publicly-listed companies, and that while companies had corporations law, super funds had the Superannuation Industry Supervision (SIS) Act 1993 and trust law. “That makes the regulations different,” she said. Reynolds said that while the principles should be the same, the laws were different and should not be confused. “Some funds choose to have independent directors, and if they want them and need them they should be able to have them and it should be encour-
espite strong arguments mounted by the Australian Institute of Superannuation Trustees (AIST), leading superannuation industry barrister Noel Davis insists the Government should legislate to ensure all superannuation funds operate under the same trustee model. In a column published in this edition of Super Review (page 24), Davis claims “there is no logical basis for the existence of the current differences between retail and industry funds in the way in which their directorships are organised”. “The applicable legislation for both models is in need of reform,” he said. Davis said some of the areas that need to be addressed are: • There needs to be consistency in the requirements that apply to both retail funds and industry funds. • It is not appropriate to have employer representatives in funds offered to the public. • At least a majority and, arguably, all of the directors should be required to be people who are not associated with service providers and who don’t, therefore, have conflicts of interest in making investment, insurance and other decisions. 3
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ROUNDTABLE
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Fiona Reynolds
“Some funds choose to have independent directors, and if they want them and need them they should be able to have them.” aged,” she said. “But I don’t think there should be some rule that says every fund must have one independent director, or two independent directors.” AIST consultant David Haynes pointed to the fact that while there had been a good deal of discussion around the make-up of industry fund trustee boards, there had been little discussion around the composition of retail superannuation funds boards “where almost to a man and a woman the representatives of those boards are employees of the parent financial institution”.
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EVENTS
“I would suggest that there is a conflict that exists there between the responsibility as an employee and their parallel responsibility as a trustee of a superannuation fund,” he said. NGS Super trustee John Quessy suggested that it might in fact be the retail superannuation funds which needed reform. “What I fear is happening is that there is a situation where you did this and it was really good and therefore we are going to make it compulsory for everybody. That’s dumb,” Quessy said. SR 31
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