Tougher disclosure plan mooted for super

THE $1.4 trillion superannuation industry would be forced to disclose all transactions between funds and related parties, under a plan for sweeping change from the union-linked sector.

THE $1.4 trillion superannuation industry would be forced to disclose all transactions between funds and related parties, under a plan for sweeping change from the union-linked sector.

In an attempt to boost transparency, fund managers would also be forced to reveal how much they are paid to invest members' retirement savings.

Industry Funds Management, which represents not-for-profit funds, unveiled the plan as part of its proposal for tougher governance rules, released yesterday.

Related-party transactions occur where a fund outsources a service to an entity with which it has financial links, such as a bank-owned fund purchasing services from the bank.

A 2010 paper from the Australian Prudential Regulation Authority found "for-profit" retail funds tended to pay more when entering into related-party transactions than other funds.

Top fund managers - who can make anywhere between $500,000 and several million dollars a year - would also have to publish their pay under the policy. Today, fund managers' pay is often a closely guarded secret.

The calls for change came as APRA released final rules on investment and governance standards for the super industry - which it will supervise from next July.

The deputy chairman of APRA, Ross Jones, said the regulator would take a "principles-based" approach to implementing the new regime, and would not be too prescriptive.

"APRA will work with superannuation trustees and boards of directors to monitor how they meet the new prudential requirements and uphold their responsibility to prudently manage superannuation funds in the best interests of beneficiaries," Mr Jones said.

The latest proposals from union-linked funds go further than what the regulator has outlined in its standards for the industry.

The new chair of Industry Funds Management, former Victorian Premier, Steve Bracks, said the group's latest proposals would make superannuation more accountable as the industry grew.

"We are calling for uniform disclosure standards to be legislated across all parts of the super industry - including investment managers and other material service providers," he said.

Earlier this year, retail funds proposed their own set of governance standards, which included having a majority of independent directors on fund boards, and publishing the pay of senior executives and directors.

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