Super funds pushed closer to transparency

Unlike listed companies, super funds are not required by law to reveal how much their directors and executives are paid, and the level of disclosure in the industry varies widely. As part of a sweeping change in super regulation, the Australian Prudential Regulation Authority is pushing for new rules requiring disclosure of pay, plus a shake-up in governance arrangements.

In response, groups representing both retail and not-for-profit funds have backed the regulator's plan.

The chief executive of the Australian Institute of Superannuation Trustees, Fiona Reynolds, said the proposal was reasonable given the demand super funds made of listed companies. "We are expecting corporations to disclose remuneration. If we are expecting that we should do it ourselves," Ms Reynolds said.

A submission from the Financial Services Council, which represents funds owned by the big banks, said it backed disclosure of remuneration that was paid from assets of the superannuation trust.

The chief executive of Industry Super Network, David Whiteley, said some industry funds already published how much directors and managers were paid.

"There's clearly a growing community expectation that the fees of directors are disclosed and that remuneration of executives is disclosed," Mr Whiteley said.

Today, the level of disclosure varies widely. Several not-for-profit and retail funds including HOSTPLUS and Colonial make no mention of remuneration of fund directors in their annual reports for individual funds. On the other hand, Australian Super discloses the pay of senior managers in bands.

Where director remuneration is disclosed, research firm SuperRatings has found that more than half of funds pay directors between $20,000 and $50,000 a year. It said 18 per cent pay their directors less than $20,000.

Ms Reynolds said there was no desire to hide remuneration in the super industry, which was already moving in this direction.

"With change you have to start somewhere. I think the industry is moving there and this will just help it along," she said.

Other proposals from APRA include rules requiring funds to build up cash reserves to protect members' funds, and more rigorous risk management processes.

The changes follow the Stronger Super review of 2010, chaired by former regulator Jeremy Cooper, who now works for Challenger.