A recent Financial Services Council report 1 has set a new benchmark for increased governance and transparency for retail and corporate superannuation sectors by mandating the following:
- Superannuation funds must have an independent chair.
- Majority of directors must be independent.
- Remuneration of directors and senior management must be disclosed where paid from the trust.
- Directors must not hold multiple and competing superannuation fund board positions.
- The fund must develop an environmental, social and governance risk management policy that is made available to members.
- The fund must develop and publicly disclose a proxy voting policy and publish its Australian proxy voting record.
However, no such mandatory requirement exists for industry superannuation funds, which are often regarded as lacking transparency and sound governance by investors. The same sentiment is captured in a report by noted economist Judith Sloan2 who describes the lack of disclosure of director remuneration for industry superannuation funds. A cursory desktop research revealed that most industry superannuation funds, in spite of publishing annual reports, do not specify director, chairman or board remuneration. The best is an indicative band of remuneration for the board (MTAA Super and CBUS Super) 3 and 4.
The lack of publicly available information about the board remuneration for industry superannuation funds was also noted as an area of concern by opposition leader Tony Abbott who expressed his discomfort (within a week of publication of FSC report) with the way union officials were appointed to boards of industry superannuation funds and collected fees for their work even when they had no background in managing significant amounts of money5.