New superannuation governance laws needed to protect investors

“The Australian Institute of Company Directors maintains our support for the Government’s legislation to require independence on superannuation fund boards. It will apply internationally accepted standards of governance to funds that have yet to adopt the principle of independence voluntarily,” said John Brogden, the Managing Director & Chief Executive Officer of the AICD.

“This legislation is balanced and sensible. While mandating that one-third of the board be independent, the draft legislation also includes an “if not, why not” disclosure requirement that the board have a majority of independent directors. This allows flexibility for funds that are unable to the meet independence criteria immediately,” Mr Brogden said.

“The investment returns of a superannuation fund are not a litmus test for effective governance. Good governance instead provides for the long-term stability, sustainability and profitability of an entity.

“It should give investors the confidence that their assets are not just safely managed today but will generate a steady, reliable income stream when they retire.

“The legislation already has the support of leading industry superannuation funds UniSuper, VicSuper and LG Super. And other industry funds - MTAA, SunSuper and HostPlus - already have one-third independent directors.

“These funds have already proved it is more than possible for funds to adopt the principle of independence without jeopardising their operations and investment strategy.

“And the legislation has the support of CHOICE, National Seniors Australia, the Association of Superannuation Funds of Australia, the Australian Chamber of Commerce and Industry, the Business Council of Australia, Chartered Accountants and COSBOA,” Mr Brogden said.