Fraser super fund governance review must put members ‘first’

Giving members of not-for-profit (NFP) superannuation funds the right to vote trustee directors in or out and hold them accountable will mean better governance outcomes for the funds, Governance Institute of Australia has told the Fraser Review of governance arrangements in the sector.

“There’s been a great deal of controversy around how many independent directors should be on the board of a NFP super fund and what constitutes ‘independence’, but that debate could be resolved if members were simply granted the right to elect directors of their choice”, said Governance Institute chief executive Steven Burrell.

“There can then be no dispute about ‘independence’ because the members themselves have chosen the directors they believe will represent their best interests,” Mr Burrell explained.

“Good fund governance starts with the basic principle that members must have a voice. Yet at the moment, members of most funds have no say in who represents their interests. That is currently decided by third parties.”

Members of other NFP organisations have long had the ability to vote in directors of their choice and to hold them accountable with their voting power. “There’s no reason why NFP super fund members should not have the same rights in view of the growing size and importance of the retirement savings industry,” he said.

“With Australian superannuation now comprising the fourth largest pool of savings in the world and rising, members have a significant financial interest in their funds and every reason to be engaged in their investment.”

“If, as the announcement of the Fraser Review rightly points out, a key distinguishing feature of NFP funds is ‘the over-riding primacy of members’ interests’, there can be no basis for continuing to deny fund members the right to vote directly for directors they believe will act in their best interests,” Mr Burrell said.

Governance Institute has also told the Fraser Review that the governance code it is seeking to develop should not be limited to the issues of board composition and director independence, but encompass broader governance issues as well.

“Board composition and independence comprise only one element of the governance ‘big picture’. A comprehensive governance framework encompasses the entire system by which the fund is controlled and its governing body held to account and promotes integrity, transparency, accountability and proper stewardship,” Mr Burrell said.

“Given this, we think the Fraser Review should consider not only adopting a wide-ranging fund governance code similar to the ASX Corporate Governance Council’s principles and recommendations applying to listed entities, but also ensure that there is a disclosure obligation to members about how their super funds track against the code’s recommendations.”

Like the Council’s principles and recommendations, the recommendations in the code would not be mandatory, but an ‘if not, why not’ disclosure requirement would promote transparency to members.

“This would allow members to judge for themselves whether it agrees with the approach to governance taken by its trustee directors. And, if members had the right to elect candidates for the trustee board, then those disclosures would be the key to members’ decision making.

“NFP superannuation funds rightly claim that their ‘members come first’. The challenge for the Fraser Review is to introduce the governance mechanisms which genuinely make this a reality,” Mr Burrell said.

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Media contact: Hannah Edwards,

About Governance Institute of Australia 

A national membership association, advocating for a community of 40,000 governance and risk management professionals from the listed, unlisted and not-for-profit sectors.  Our mission is to drive better governance in all organisations, which will in turn create a stronger, better society.


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