Proposed changes for the boards of superannuation funds will impose significant costs and risks on not-for-profit funds “for no good reason”, argues the Australian Institute of Superannuation Trustees (AIST).
In a submission responding to the federal government’s draft legislation which proposes changes to the composition of super fund boards, AIST said the changes “do nothing” to address the real and “demonstrated conflicts” associated with board structures in the retail super sector.
“These changes will impose significant costs and introduce risks to the industry for no good reason,” the submission said.
“[They also] take Australia in the opposite direction to the rest of the world by removing member representation from boards of occupational-based retirement savings funds.”
Also arguing there have been no prudential failures or losses suffered by members in the sector unlike the scandals that have “plagued the banks”, AIST said these changes will have a bigger impact on equal representation boards then the for-profit retail sector.
“AIST disputes the need for change in light of the existing prudential framework and the powers available to the regulators to rectify or address any issues that arise,” the submission said.
“With the changes, APRA is granted powers that should only lie with the legislature in the proposed package of reforms, as well as powers that are significantly broader than those available to the in the regulation of other APRA-regulated industries.”
The superannuation trustees lobby group added that it is concerned about the level of board disruption that is proposed within a short timeframe.
“The impact on decision-making and boardroom culture poses a risk to the best interest of members,” the submission said.
“Coupled with the proposed removal of the two-thirds voting rule, AIST believes that good governance practices will be diminished as a result, with members bearing the cost,” it said.
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