Fund managers' pay under scrutiny
Amid a push to make superannuation more transparent, new Rainmaker figures provide a glimpse into the world of super fund remuneration, an area that was notoriously opaque.
Rainmaker's survey found there were 17 funds which chose to disclose executive remuneration - but not one of these was a "retail" fund, which are run for profit.
Across the group included in the survey - a mix of public sector, corporate and union-linked industry funds - the average chief executive pay packet was $474,000.
The highest-paid super fund boss in the survey was the chief executive of the Telstra Superannuation Scheme, Martin Crowe, who received between $800,000 and $809,999.
Next was Australian Super's Ian Silk, who received $586,767.
The third highest paid was the chief executive of Western Australia's public servant fund GESB, Howard Rosario, who Rainmaker estimated was paid $585,001.
The fund with the lowest executive pay was Media Super, which paid recently-departed chief executive Ross Martin $290,000 last financial year.
Funds are not required to disclose executive pay by law, but there is growing pressure from the public and government for greater transparency.
New rules beginning in 2013 will also force funds to disclose more than they currently do.
Retail funds, for instance, will publish the pay packets of fund executives on a proportional basis, so that an executive who spends half of their time managing a certain fund will have half of their total pay disclosed under that fund's obligations.
The chief executive of Industry Super Network, David Whiteley, said industry funds were conscious of the salaries being paid, but they also had to compete for staff.
"At the end of the day industry super funds are seeking to employ the very best people they can to manage their members' retirement savings," Mr Whiteley said.
He argued retail funds' proposal to disclose part of executive pay should be revisited.
"I think there needs to be a greater understanding of why they are embracing only limited disclosure."
The Financial Services Council, which represents retail funds, is also requiring funds to have a majority of independent directors on fund boards as part of its push to lift governance standards.
Rainmaker's director of research, Alex Dunnin, said although the CEO salaries disclosed were high in absolute terms, they were lower than what was paid in the for-profit sector.
Frequently Asked Questions about this Article…
Rainmaker's survey found 17 funds chose to disclose executive remuneration (none were retail funds). Across the surveyed group — a mix of public sector, corporate and union-linked industry funds — the average chief executive pay packet was about $474,000, with disclosed amounts ranging from roughly $290,000 up to about $800,000.
The survey named Telstra Super's chief executive Martin Crowe as the highest‑paid (estimated between $800,000 and $809,999). Next were AustralianSuper's Ian Silk at $586,767 and GESB's Howard Rosario at an estimated $585,001.
Media Super reported the lowest executive pay in the survey: recently‑departed chief executive Ross Martin was paid $290,000 in the last financial year.
No — funds are not currently required by law to disclose executive pay. However, there is growing public and government pressure for greater transparency, and industry surveys such as Rainmaker's are shedding more light on remuneration practices.
New rules beginning in 2013 will force funds to disclose more information. For example, retail funds will have to publish executives' pay on a proportional basis — if an executive spends half their time managing a particular fund, half of their total pay must be disclosed for that fund.
Industry Super Network chief executive David Whiteley said funds need to compete for the best people to manage members' retirement savings, which helps explain higher pay levels. Rainmaker's research director Alex Dunnin also noted that while disclosed CEO salaries are high in absolute terms, they are lower than pay in the for‑profit sector.
The Financial Services Council, representing retail funds, is pushing to lift governance standards by requiring funds to have a majority of independent directors on their boards. This is part of broader moves to improve oversight and transparency in the industry.
Everyday investors should be aware that executive pay in many not‑for‑profit and industry funds has been sizeable and that transparency is increasing. With new disclosure rules coming into effect and greater public scrutiny, investors can expect more pay information to become available — and they can use that information as one factor when assessing fund governance and value for members.
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