SMSF Owners welcome the Government’s decision to require an independent Chair of superannuation trustee company boards and at least one third of the directors to be independent.
This move will improve objective decision making and enhance the proper management of conflicts of interest.
SMSF Owners believe the highest standards of governance should apply to mainstream superannuation funds which hold more funds in trust for Australians than they keep in the bank.
Most industry funds are public offer funds which seek to attract savings from people outside their traditional constituency. As such they should observe standards of governance and transparency equivalent to those required of publicly listed companies that seek shareholder investment.
We have an interest in ensuring good management of APRA-regulated funds because many SMSF members have savings invested in these funds, either as individuals or via their SMSF.
We expect that an injection of more independent directors to the trustee companies of superannuation funds will lead to better decision making and greater transparency. It is crucially important that the draft legislation properly defines ‘independent’. There must be transparency with regard to the appointment process, the credentials of directors, other positions held, potential conflicts of interest and remuneration.
Greater transparency should extend to informing members of the financial relationship between the trustee company, the superannuation fund and its members, including:
- any fees taken from investment income before striking a unit price
- income derived from the difference between the buy-sell prices of units
- whether the full benefit of tax refunds are passed to members
- the basis on which earnings tax and capital gains tax are allocated to member accounts
- the allocation of unrealised capital gains tax liabilities when members close their accounts • fees and commissions received from life and disability insurers
The trustee companies should also disclose what they spend on their advocacy efforts to influence public policy on superannuation and how this money is spent.
The Assistant Treasurer noted that the new governance arrangements would not apply to self- managed superannuation funds. This is appropriate as the trustees and beneficiaries of self- managed funds are essentially the same people. As trustees, they can be relied on to act in their own best interests as members of the fund.
Source: SMSF Owners’ Association
