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Independent directors not warranted for super funds
Mandating independent directors on not-for-profit industry superannuation funds does not guarantee improved fund performance and could hinder retirement incomes, a centre-left think tank believes.
The McKell Institute issued a new report titled ‘The Success of Representative Governance on Superannuation Boards', saying super funds with representatives from employer and employee bodies on their board of directors have outdone for-profit appointed trustee competitors on performance.
"The Federal Government should hold off on mandating reform in this area without providing strong evidence in favour of such a change," the McKell Institute's executive director Sam Crosby said.
"The trillions of dollars of Australians' retirement savings are far too important to our future to jeopardise with ideological dogma."
After the Institute investigated 25 years' worth of statistical evidence, empirical data and existing research, Crosby asked "when a system is working better than the alternative, why tamper with it?"
"There is abundant room for reform across our superannuation sector, but it would seem misguided in the extreme for the federal government to fixate of ‘fixing' one of the areas that is actually delivering," he said.
Industry Super Australia chair Peter Collins said he is not surprised the representative governance model has been effective for Australian retirees.
"ISA has always argued that pragmatism and evidence should trump pre-conceived ideological positions and this report adds a thorough and important body of evidence to the debate," he said.
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The future of superannuation policy remains uncertain, with further reforms potentially on the horizon as the Albanese government seeks to curb the use of superannuation as a bequest vehicle.
Superannuation funds will have two options for charging fees for the advice provided by the new class of adviser.
The proposed reforms have been described as a key step towards delivering better products and retirement experiences for members, with many noting financial advice remains the “urgent missing piece” of the puzzle.
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