Industry Super Australia says industry superannuation funds have consistently outperformed retail super funds and the Government should therefore abandon proposed super fund governance changes.
According to Industry Super Australia (ISA) the SuperRatings‘ Fund Crediting Rate Survey, up to 30 June 2015, shows Industry Super Funds outperformed ‘bank-owned super funds’ by 2.01% over a rolling 1 year period, and 1.94% over a rolling 10 year period.
ISA says this is evidence that the governance arrangements for superannuation funds don’t need to be changed.
“The sustained outperformance of funds in the not-for-profit sector is no coincidence: it is the product of a member-focused culture and a governance structure designed to deliver all profits to members,” said David Whiteley, Chief Executive of Industry Super Australia.
“The latest data also highlights the habitual underperformance by the banks and why the government’s proposed changes to super fund governance miss the mark.”
The Government is proposing that public offer super funds should have a minimum of one-third independent directors.
“In their current form, the government’s proposals aim to apply a one-size-fits-all approach to two distinct governance models, resulting in dramatic and unnecessary changes to the better performing sector, while applying a light touch to the ‘for-profit’ bank-owned super funds,” Mr Whiteley said.
“We are concerned this would impose a significant change to the character and structure of industry super funds and other successful not-for-profit funds operating under the equal representation model, which is designed to give a voice to members.”
ISA said the proposed governance changes are less rigorous than even the banks’ own current Financial Services Council (FSC) industry code.
“For example the current FSC code requires bank-owned super funds to have a majority of independent directors on the boards of their super funds, yet the proposed laws would relax that standard, allowing a majority of conflicted directors, including bank executives, onto boards,” said Mr Whiteley.
“In other words, the government’s changes would require the banks to do much less than what they are voluntarily prepared to do to address their shortcomings.”
The Financial System Inquiry, to which the Government has yet to respond, recommended a majority of independent directors/trustees for superannuation fund boards and an independent chair.
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