Bernie Fraser supports the status quo, saying model “not broken”

Bernie Fraser delivers his long-awaited superannuation governance review.

Bernie Fraser supports the status quo, saying model “not broken”

The former Reserve Bank governor’s long-awaited review of superannuation governance has created some controversy, with the findings of The Fraser Governance Review finding in favour of the status quo.

Bernie Fraser, himself a former director of several large industry super funds, said he found no grounds for legislation that would require a minimum number of independent directors to sit on super fund boards.

He believes that there is no need to mandate a quota of independent directors, because it was "far from self-evident" that doing so would deliver better performance.

“As some seem to think, is any benchmark really a secondary consideration alongside an unshakeable belief that “representative” directors of employers and members couldn’t possibly be as good as “independent”  directors?” wrote Mr Fraser.

Mr Fraser said the current model is not broken, as evidenced by the consistent annual outperformance by 1.5 to 2 per cent of not-or-profit funds (NPF) over for-profit funds.

“The net returns to members of NFP funds – collectively and separately – have consistently and significantly exceeded returns to members of retail funds,” said Mr Fraser.

Instead, he recommends that a mandatory code of conduct be introduced across the entire super sector and for funds to recruit for their boards people with the proper skills, commitment and values rather than favouring independence.

"You've only got to look at the arithmetic," said Mr Fraser. "If you've got nine directors sitting around a table, and the government proposal is to pick the chair out of one third of them, which is only three, I would say that's not very sensible."

The Coalition had previously tried to introduce laws that would require super funds to have one-third independent directors plus an independent chair.

Financial Services Minister Kelly O’Dwyer doesn’t agree with Mr Fraser’s findings, claiming that industry funds are using the review “to kill legislation″ for superannuation reforms that the Coalition has been working on for years.

"The Turnbull Government remains committed to legislation to improve the accountability of boards and member outcomes regardless of whether they are retail, industry or corporate funds," said Ms O’Dwyer.

“There is nothing in this report that negates the need for legislation to lift the standard of accountability, transparency and choice across the entire superannuation sector.”

In 2010, the Cooper Review commissioned by Labor, and the Coalition’s 2014 Financial Systems Inquiry both recommended an increased quota of independent directors on industry super fund boards.

Read more at Industry Super Australia

Do you agree that we need more independent directors on super fund boards, or is the Government merely trying to defend the exhorbitant fees charged by the 'for-profit' funds? What do you think of Mr Fraser’s findings? 

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    COMMENTS

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    bob
    20th Feb 2017
    10:24am
    Just another type of the governments union bashing .What about the big tax incentives on super for the well off.
    Anonymous
    20th Feb 2017
    8:20pm
    what about it ?

    which specific big tax incentive(s) are you referring to
    LiveItUp
    21st Feb 2017
    6:58am
    I agree what big tax incentives?
    Golden Oldie
    20th Feb 2017
    10:35am
    Leave the Industry Funds alone. They are doing better than the retail funds, foisting 'independant' advisors on them would be detrimental. Industry funds don't need the expense like high commissions to pull their returns down.
    Anonymous
    20th Feb 2017
    8:20pm
    Agree 100%
    LiveItUp
    21st Feb 2017
    6:59am
    Only super I would have is my own SMSF as the rest have too many fees and llow returns.
    Rosscoe
    20th Feb 2017
    10:35am
    Who would I rather take advice from? Bernie Fraser or Kelly O'Dwyer? My money is on Bernie every time.
    Kaz
    20th Feb 2017
    11:15am
    Absolutely!
    Jess M
    20th Feb 2017
    11:38am
    Bernie Fraser knows far more about Super than any of the present government.
    The government should leave our, my Industry Super Fund alone.
    GeorgeM
    21st Feb 2017
    4:26pm
    Absolutely agree with the above.
    However, Bernie (with his vast experience) should have also recommended long ago caps to Super to curtail the misuse of Super concessions by wealthy for minimising taxes at taxpayers expense. He and his Labor friends have always turned a blind eye to these rorts.
    Fredklaus
    20th Feb 2017
    11:12am
    stop all the tax befits for super ,pay everyone pension at 65 like new zealand,let Super funds be deregulated.replace the tax rip off when GOV pinched pensioners money collected over many years.
    Anonymous
    20th Feb 2017
    8:21pm
    Agreed again !
    LiveItUp
    21st Feb 2017
    7:01am
    There was never any money for the Government to pinch.
    GeorgeM
    21st Feb 2017
    4:35pm
    Agree, Fredklaus, all should be paid Pensions (with a reasonable say 20 years tax-paying history in Australia), except that I think a certain level of Super with concessional tax (up to limited amounts) should remain to encourage savings. All additional actual Income should be taxed at full rates for everyone including Politicians.

    Go away, Bonny, your comment is ignorant and typical. Govt has been collecting (pinching) an extra 7.5% in taxes to afford Pensions for around 70 years now.
    Old Geezer
    23rd Feb 2017
    4:17pm
    There is no big pot of money anywhere for OAPs as it comes out of revenue collected each year. I had a good laugh about that mythical 7.5% in taxes as most people don't pay anywhere near that in tax today after all the benefits are deducted.
    Kaz
    20th Feb 2017
    11:14am
    Let me see, who do I believe: Bernie Fraser or Kelly O'Dwyer? If it's not broke, don't fix it! Super was meant as a relief for the future pension burden. It is for the individual, not the government to control.
    Tom Tank
    20th Feb 2017
    11:34am
    Just another push by government to protect their donations from banks, insurance companies etc who are the ones who are not competitive in the superannuation industry. They should be examining them to find out why they cannot compete against industry funds.
    They won't do that of course because they won't like the answers. It is just part of the class war the LNP have been waging since the year dot.
    floss
    20th Feb 2017
    12:50pm
    They have mucked up the country and now trying to do the same to our Industry Super Funds that are noted a being world class.We all know it is just a grab from the big banks that can't match Industry Funds in any way. Hands off you mob from the Big End of Town look after the needy not the greedy.
    mogo51
    20th Feb 2017
    12:52pm
    When compulsory superannuation was introduced back 20 plus years ago, it was a great innovation for the country. What they did wrong was put it in the hands of private enterprise. These people do not work the funds for your benefit, but rather theirs, as they want to make profits.
    Why the Labor Government of the time did not follow the Singapore model is totally beyond me, the country would be in a much better state than it is currently in.
    floss
    20th Feb 2017
    12:57pm
    Thank god for good men like Bernie Frazer whom I have great respect for.Watch him and learn Mr Tumbull it will make you a better man.
    Not a Bludger
    20th Feb 2017
    1:34pm
    What else would you expect from a leftie, rent seeker such as Bernie Fraser who took industry super funds' (aka union bosses') coin for years.

    Union bosses must be kept well away from other peoples' super money and fund boards must have a decent proportion of independent directors.
    Anne Ozzie
    20th Feb 2017
    4:01pm
    Not a bludger - He was the Governor for the Reserve Bank of Australia for many years and a much better financial manage than the current government. He also came from a battler background and pulled himself out of it by education and is much better able to speak on financial matters including super than most. He is also one of the most honest money men I know. Who's looking after your super Not a Bludger - some private company ripping you off for commission and life insurance no doubt?
    Rae
    20th Feb 2017
    6:12pm
    Well the business bosses and self employed contractors won't have a worry about Union or any other Association, Council, Corporation or whatever it's called taking their money.They don't actually have to put 9% of their money into it each payday.

    Must be nice to be able to use your hard earned how you like including paying off debt a lot faster.

    Then they can always get a full pension if they work it right at the end. There is a few hundreds of thousands bonus right there.
    P$cript
    20th Feb 2017
    7:21pm
    The name Industrial super is a hint that it is no only setup by unions but the companies in the industries. So if your so stupid to invest in the retail superannuation reveals your so right wing you'd cut off you left arm and leg because they offend you.
    DaveL
    20th Feb 2017
    2:29pm
    By having independent Directors as the government suggest' does this mean we are going to end up with current Company Directors replacing Employer/Employee representatives.
    If so, heaven help our returns.Most current Company Directors are members of "Australian Institue of Company Directors', an organisation not worth the time of day. Just another BCA.
    I was a member of the Coal Industry fund, and I they handled my fund well.
    floss
    20th Feb 2017
    3:18pm
    Not a Bludger get your head out of your back side and join the real world if you are half the man Bernie Frazer is which from your comment I very much doubt.
    floss
    20th Feb 2017
    3:46pm
    Fraser sorry Bernie.
    Greg2427
    20th Feb 2017
    4:35pm
    Would trust Bernie over O'Dwyer any day!
    MICK
    20th Feb 2017
    7:04pm
    What.....tax cuts for the rich to avoid the real rate of tax is fair. "Not broken"? Guess which feeding trough Fraser has his own snout into?
    P$cript
    20th Feb 2017
    7:30pm
    Good one, this was not what was being investigated because it was the Howard government that made changes which has allowed the rich to have the nose in the trough. Originally there was a maximum benefit limit, which limited the rorting.
    LiveItUp
    21st Feb 2017
    7:08am
    What tax cuts Mick one can hardly put a razoo into super today as it is so restricted? No worth the effort any more as there are better after tax returns elsewhere.
    Rae
    21st Feb 2017
    7:31am
    That is exactly right Bonny and as Superannuation was a compulsory system set up for PAYG worker's you have to wonder why the wealthy have had any damn say in it at all.

    The wealthy have any number of ways to make money and avoid taxes.

    Nasty spiteful types just don't like the idea that the Industry funds are making money for those undeserving workers.
    This is all about the ideology of "who's" best and has absolutely nothing to do with supporting retirees in there old age.

    The LNP couldn't give a rat's for workers. When have they ever done one thing to help the ordinary wage earner?
    PAYEdmydues
    22nd Feb 2017
    12:13am
    Agree Bonny and Rae.
    What tax cuts Mick?
    Nice rhetoric but lovely limits on contributions are very small gains for ''the rich"! Whoever they are.
    PAYEdmydues
    22nd Feb 2017
    12:13am
    Agree Bonny and Rae.
    What tax cuts Mick?
    Nice rhetoric but lovely limits on contributions are very small gains for ''the rich"! Whoever they are.
    LiveItUp
    21st Feb 2017
    7:06am
    Why can't our young people just go to a bank and set up a no fee account for their super and when tney have enough then put it in a proper super fund? The way the system is now even industry funds all they are doing is paying fees etc with nothing left for their retirement.

    That is what is wrong with super today.