The federal government’s proposed restructure of superannuation governance will not improve the retirement savings of Australians, but could in fact put their savings at risk, argues Industry Super Australia (ISA).
In its submission to Treasury, Industry Super Australia said the draft legislation – Superannuation Legislation Amendment (Governance) Bill 2015: Governance arrangements for APRA – presented “no evidence” that the changes will improve retirement outcomes.
According to the organisation, removing the requirement for non-for-profit funds to include member and employee representation on their boards will put members’ savings at risk.
ISA chief executive David Whiteley said: “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.”
In its submission, ISA said “governance requirements should rest upon clear empirical evidence, and the case for change has not been made”.
Imposing a “one-size-fits-all” model for board composition will create governance challenges, the organisation stated.
“There is a real risk that importing the finance sector norms to the boardroom will undermine the member first culture that has been a hallmark of equal representation.
“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,” said Mr Whiteley.
As stated in its submission ISA reiterated: "It is widely acknowledged that member and employer voices are important in fund governance; removing these voices would be a backward step."
“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," Mr Whiteley said.
The organisation said the proposed bill will not achieve its objectives of managing conflicts, ensuring a separation of boards from management, and will "deepen the pool" from which directors are drawn.
ISA also voiced concern that the bill "confers alarming and unprecedented powers and wide discretion on APRA to determine, administer and interpret the law".
The COVID crisis has revealed how central banks have amplified wealth inequality in recent years, according to Schroders, with its head of A...