The Association of Superannuation Funds of Australia supports proposed reforms to require public-offer superannuation funds to have at least one-third independent directors and an independent chair, while rejecting other proposed changes.
The Government recently released draft legislation requiring at least one-third independent directors/trustees and an independent chair, among other changes, to apply from 1 July 2016. Legislation is likely to go before Parliament when it sits in August. These changes have been rejected by AIST and Industry Super Australia.
In a submission in response to the draft legislation the Association of Superannuation Funds of Australia (ASFA) says it supports requiring at least one-third independent directors and an independent chair.
“This support should not be seen as a criticism of current governance structures, but instead recognises changing community expectations, increased complexity and risk in running superannuation businesses, and significantly higher regulatory standards and liability,” said the submission.
“ASFA supports increasing the number of independent directors on the boards of super funds and we recognise that over the past few years, many trustee boards across all sectors have already taken the opportunity to supplement their skills and have appointed independent directors,” said ASFA CEO Pauline Vamos.
“The right independent directors can offer diversity of thought and the benefit of experience outside traditional superannuation services.”
While supporting the core governance reforms ASFA rejects some of the other changes, including a requirement to report annually on an ‘if not, why not’ basis whether a fund has a majority of independent directors.
“ASFA considers that it is inappropriate to create an obligation to report on an ‘if not, why not’ basis if funds do not have a majority of independent directors – given there is no legislative (or other) requirement to have such a majority,” said the submission.
The draft legislation says existing superannuation funds at 1 July 2016 will have three years from the passage of the legislation to comply with the governance changes. ASFA says instead the three year transition period should “commence on 1 July 2016 and end on 30 June 2019, or three years after the legislation receives Royal Assent, whichever is later.”
“We look forward to working with the government and APRA to get the details of these important reforms right,” said Ms Vamos.
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