The Federal Government’s proposal to require independent directors on superannuation boards will bring the industry closer to world-class standards of governance and improve transparency and performance for fund members.
The Australian Institute of Company Directors (AICD) has long called for greater independence on superannuation boards based on the recommendations for companies listed on the ASX.
“It is widely accepted that independence is critical to the effective operation of any board. Independent directors bring many benefits to a board, including the ability to exercise objective judgement, avoid conflicts of interest and assist in managing competing demands,” said John Brogden, the AICD’s Managing Director & Chief Executive Officer.
“The AICD encourages super funds to move beyond the minimum standard proposed by the government and consider appointing a majority of independent directors on an “if not, why not” basis. Super funds generally believe this is the standard that should apply to listed companies, so there is no reason they should not adopt it themselves,” Mr Brogden said.
“The performance of an entity – either share price gains for a listed company or investment returns for a super fund – is not the only test of whether its governance is effective.
“Good governance instead provides for the long-term stability, sustainability and profitability of an entity. It should give investors the confidence that their assets are not just safely managed today but will be able to generate a steady, reliable income stream as they retire in the decades ahead,” Mr Brogden said.
Already a member?
Login to view this content