The Coalition has agreed to clarify the definition of an 'independent' director in superannuation law, and has also guaranteed the industry a three-year transition period to its new governance regime.
The government has released the outcome of its consultation with the industry about its proposal requiring all super funds have a minimum of one-third independent directors and an independent chair.
Assistant Treasurer Josh Frydenberg took the opportunity to reject a number of criticisms of the government's proposal at the Financial Services Council (FSC) conference earlier this month.
In a statement released yesterday, Mr Frydenberg said that following the consultation the government has agreed to make "several amendments" to the draft legislation.
There will be more detail on the definition of 'independent' in the law, going beyond APRA's prudential standards, he said.
The transition period to the new board composition rules will start from the time the legislation receives Royal Assent, giving funds a full three years to prepare.
If a super fund has an APRA-compliant transition plan in place, neither the current 'equal representaion' rules nor the new independence requirements will apply.
Mr Frydenberg also clarified that the independent chair can be included in the one-third independent director count.
The period for filling a trusee vacancy has been lengthened from 90 to 120 days, he added – and the new bill will override both governing rules and the constitution of a corporate trustee.
In the explanatory materials accompanying the bill, the government will also include:
Industry Super Australia (ISA) chief executive David Whiteley reacted to the announcement by calling the changes "cosmetic".
The ISA also released "new legal analysis" from Hall and Wilcox, which considered the existing regulation of super boards by APRA and concluded "it is difficult to identify existing gaps or areas where APRA does not already have significant powers to step in if it identifies an area of concern".
"The new laws will hand excessive new powers to APRA to interpret and police poorly defined areas of law, abandoning the conventional role of elected government," said the ISA.
Mr Whiteley said the Hall and Wilcox advice suggests the government's changes are "a solution looking for a problem".
"These proposed changes represent unnecessary over-reach and have little to do with improving the retirement outcomes of Australians," he said.
"Not-for-profit funds, including industry super funds, have outperformed the bank’s for-profit funds for over a decade, overseen by boards governed by employer associations and unions," Mr Whiteley said.
Financial Services Council chief executive Sally Loane welcomed the government's clarification of the proposed legislation.
"The rising tide of governance will lift standards for all super funds – retail, industry, public sector and corporate. The changes do not single out any one fund type, but are actually designed to improve governance across the $1.4 trillion APRA-regulated sector," Ms Loane said.
"With the changes, Australian consumers can have more certainty that the entity managing their retirement savings has the highest standard of governance regardless of whether it is a retail, industry, public sector or corporate fund.
"In a mandatory super system, consumers are entitled to the highest standards of governance," Ms Loane said.
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