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Governance Institute calls for superannuation industry–led body

Governance Institute has today lodged a submission supporting the Productivity Commission’s view in its Draft Report Superannuation: Assessing efficiency and competitiveness that ‘High quality governance is integral to a system where members rely on others to make decisions on their behalf’.

“Governance Institute has consistently advocated for the reform of superannuation governance and for increasing the number of independent directors on superannuation trustee boards” said Steven Burrell, chief executive officer of Governance Institute.

“Our long held belief is that a superannuation industry–led body — which collectively develops guidance on governance matters —  is the best solution to many governance issues in superannuation, similar to that applying to listed companies under the ASX Corporate Governance Council’s Principles and Recommendations. Legislation should require funds to make disclosures about their governance against this guidance”, Mr Burrell continued.

“We are on the public record as stating that our preference is for the boards of superannuation funds to have a majority of independent directors, with appropriate election and accountability requirements. However, we recognise that the Commission’s draft Finding that a ‘critical mass’ (at least one third) of funds’ directors should be independent is a pragmatic, initial step in ensuring board effectiveness”, said Mr Burrell.

Governance Institute’s submission also recommends that :

  • members of superannuation funds should have the right to elect directors via direct voting, but that the decision-making (voting) should not be connected to a statutory meeting
  • employers, unions and employer organisations should not vote, control the voting process or set the rules for voting without approval by members, and
  • the rules concerning voting should be set out in funds’ constitutions and made available to members in an easily accessible corporate governance section of the website and constitutional amendment should be subject to member approval.

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