AICD Acting Chairman Gene Tilbrook said that Australians deserve to have confidence in the governance standards of the organisations trusted with their superannuation.
“A system that is trusted with the retirement savings of all Australians needs the highest standards of governance,” he said.
“For that to happen, superannuation fund governance standards must move closer to those that already apply to all other APRA regulated entities. The inclusion of independent directors is widely recognised as a critical element of good corporate governance.”
Two government reviews, commissioned by both sides of politics, have made strong arguments in favour of appointing independent directors to superannuation fund boards.
The 2010 Cooper review recommended that independent directors be appointed to industry superannuation funds as fund choice meant many fund members were not adequately represented. It also pointed out the potential for conflicts of interest in the existing model.
The 2014 Financial System Inquiry went further and recommended that funds have a majority of independent directors, including an independent chair. It pointed out that it is more important that directors be independent, skilled, and accountable, now that fund members exercise choice over their superannuation.
Research by Professor Alex Frino, commissioned by the AICD’s Governance Leadership Centre, also shows that boards with between 30 per cent and 60 per cent of independent directors outperform others.
“Good governance practices, including board independence and transparency, provide for the long-term sustainability, stability and financial performance of an entity,” said Mr Tilbrook.
“Superannuation boards need to be structured to best serve and add value to the fund and its members. Independent directors are a crucial part of achieving this good governance outcome.”
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