Industry funds push back on reform plans
Industry superannuation funds are pushing back on proposals to appoint independent directors to their boards and to allow their for-profit rivals to compete for business via industrial awards.
Funds in the non-profit super sector, which has more members but less money than their for-profit and self-managed counterparts, say the make-up of their boards has contributed to their outperformance.
A government paper released on Wednesday sought feedback on what proportion of super board members should be independent, and raised the prospect of trustee boards having independent chairs.
Industry funds have an equal number of employer and employee representatives on their trustee boards.
By contrast, the super boards of big retail funds such as AMP, Challenger, ANZ Wealth and Colonial will comprise a majority of independent directors and have an independent chairman by July next year.
David Whiteley, the head of industry super lobby group Industry Super Australia, said any change by the government must be driven solely by a desire to boost member returns.
"What is evident is that the [50-50] representative trustee model has delivered superior returns over the long term," he said.
The discussion paper, released by Assistant Treasurer Arthur Sinodinos, canvassed whether super fund directors should be subject to regular performance appraisals, and capping the terms of directors.
A retail fund lobby group, the Financial Services Council, welcomed a proposal to strip the industrial umpire, the Fair Work Commission, of its power to select default super funds in employment awards, saying it would boost competition and transparency.
A 2012 report by the Productivity Commission estimated that between $6 billion and $9 billion in super contributions were made to default funds; that is, funds for members who do not choose their own.
Coalition backbencher Paul Fletcher this year accused the union movement of using the $1.75 trillion sector to boost its influence; industry funds have long pointed to their cheaper fees and therefore outperformance.
Alex Dunnin of super research group Rainmaker said the government's paper was "free of ideological dog-whistling" and could produce unpredictable outcomes.
Mr Dunnin said the previous government's StrongerSuper package - requiring funds to offer a simple, low-cost default super product called MySuper - had revitalised the country's retail sector.
"This is why predicting who will be winners and losers from this latest review may not be as easy as it first seems."