Super needs to come clean, say CPAs

AUSTRALIA'S $1.3 trillion superannuation industry lacks transparency and workers should receive more information about who governs their retirement money and where it is invested.

By InvestSMART · 8 Dec 2011

By InvestSMART ·
8 Dec 2011

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AUSTRALIA'S $1.3 trillion superannuation industry lacks transparency and workers should receive more information about who governs their retirement money and where it is invested.

A CPA Australia issues paper calls for increased transparency and disclosure in the superannuation industry and says reporting standards should match those of publicly listed companies.

More than 75 per cent of CPA Australia members polled by the accountancy body believe there needs to be greater transparency around costs and underlying asset investments, and 90 per cent said trustee and senior management salaries should be more transparent.

"Super funds invest in publicly listed companies but don't even meet up with the respective reporting standard," CPA Australia CEO Alex Malley said.

But Industry Super Network chief executive David Whiteley said the industry was moving towards increased transparency, with a number of industry funds already disclosing the salaries of executives and directors in income bands.

Providing every member with a copy of a 200-page financial statement was useless, he said. "Our long-term challenge is disclos[ing] this information in a manner that is accessible and useful for our members." Mr Whiteley said net returns would remain the most important piece of information for members.

The CPA Australia paper said the global financial crisis highlighted the need for greater transparency, with many Australian superannuation funds invested in shaky overseas markets.

Financial Services Council chief executive John Brogden said he supported better governance and transparency in the superannuation industry and was working through new standards with the Australian Prudential Regulation Authority.

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Frequently Asked Questions about this Article…

Why do CPAs say Australia’s superannuation industry lacks transparency?

CPA Australia says the $1.3 trillion superannuation industry needs greater transparency because members currently get limited information about who governs their retirement money and where it is invested. Their issues paper and member poll highlight gaps in reporting on costs, underlying asset investments and executive governance.

What specific transparency and disclosure changes does CPA Australia recommend for super funds?

CPA Australia calls for increased transparency and disclosure that matches the reporting standards of publicly listed companies. That includes clearer reporting on fees and underlying assets, and more openness around trustee and senior management pay.

How do industry groups and fund managers respond to calls for more superannuation transparency?

Industry groups acknowledge the need for better disclosure. The Industry Super Network says the sector is moving toward more transparency and some funds already publish executive and director pay in income bands. The Financial Services Council supports improved governance and is working with APRA on new standards.

Should I expect to get detailed financial statements from my super fund?

While full financial statements exist, industry leaders note that giving every member a 200‑page statement is not helpful. The focus is on making key information accessible and useful, rather than simply sending lengthy reports.

How important are net returns compared with transparency when evaluating a super fund?

According to industry representatives, net returns remain the most important information for members. However, transparency about fees, asset allocations and governance is crucial so members can understand how those net returns are achieved.

Will I be told how my super fund invests overseas, especially after the global financial crisis?

CPA Australia’s paper noted the global financial crisis highlighted risks from overseas investments, and called for greater disclosure about exposure to shaky overseas markets. The recommendation is clearer reporting on where funds invest, including international holdings.

Are trustee and senior management salaries in super funds publicly disclosed?

CPA Australia’s poll found 90% of members want more transparency around trustee and senior management pay. Some industry funds already disclose executive and director salaries in income bands, and the sector is being encouraged to broaden that practice.

Which regulators or organisations are involved in improving superannuation transparency?

CPA Australia has issued the call for better disclosure. The Financial Services Council has expressed support for improved governance and is working with the Australian Prudential Regulation Authority (APRA) to develop new standards for the superannuation industry.