Superannuation funds will undergo a major shake up after the government announced new reforms last night.
The reforms mean that superannuation funds will be required to be managed by an independent chairman, as well as at least one third of a fund’s board being comprised of independent directors. The measures mirror recommendations from the Labor Government commissioned Cooper Review in 2010.
The move could possibly be seen as the Government targeting union-backed industry funds in a bid to increase transparency between unions and the boards currently controlling industry funds, but the new changes will also apply to corporate, retail and public sector funds.
Australia’s superannuation funds are currently worth an estimated $2 trillion, but are tipped to rise to around $9 trillion by 2040. It is expected that the number of Australians over 65 accessing their super will double by 2054–55.
Under the drafted legislation, super funds will also be required to release detailed annual reports similar to rules that apply to ASX-listed companies.
The new rules come hot on the heels of the Royal Commission into Trade Union Governance and Corruption that is investigating multiple incidents of alleged misconduct and conflicts of interest between trade unions and employers.
Assistant Treasurer Josh Frydenberg said the Federal Government believes the changes will improve the overall governance of superannuation funds.
“Not only does superannuation represent the hard-earned retirement savings of Australians, it is already the second largest asset held by Australian households,” said Mr Frydenberg. “Given the size of the superannuation system, and its importance in funding the retirement of Australians, good governance is absolutely critical.
“Independent directors bring additional experience and expertise to boards making a valuable contribution to their decision making,” he said.
Industry Super Fund (ISA) Deputy Chief Executive Robbie Campo cautioned against a blanket approach that would also affect not-for-profit super funds and its members.
“Tackling governance problems in other parts of the finance sector should be the priority,” said Mr Campo.
The proposed reforms will affect all superannuation funds under the Australian Prudential Regulation Authority (APRA), but will not influence the running of self-managed funds.
How will this affect you? Do you agree that a widespread reform is required in the management of super funds? Or would you like to see a more tailored approach to individual funds?
Read more at www.abc.net.au
