The Australian Institute of Superannuation Trustees (AIST) has sought to resist a push to have superannuation funds subject to the same governance arrangements as companies listed on the Australian Securities Exchange (ASX), arguing their trust structures make this inappropriate.
In a submission filed in response to the Government’s superannuation discussion paper, the AIST has instead argued for trustee boards to be based on the so-called “third, third, third” formula, under which a third of trustees would be employer appointed, a third union-appointed and a third independent.
The submission, filed with the Government this week, points to “the significant complexities that underlie an attempt to align the superannuation industry with other APRA-regulated industries and listed companies”.
“Superannuation funds are set up as trusts, a structure that has significantly different foundations and obligations, and that is not easily merged with other operating structures,” the submission said.
It said that the AIST supported the trust structure for the management of Australians’ retirement savings and considered “its unique properties to be essential to the continued success of our system”.
The AIST submission conceded, however, that retention of the existing trust structure regime meant the system “does however mean that alignment with other sectors may not be entirely possible in every respect”.
“While we support the ASX Corporate Governance Principles and their definition of independence as it applies in the corporate arena, the straight adoption across into superannuation is unworkable due to the unique nature of superannuation funds,” it said. “AIST submits that the definition for independent director in the SIS Act is an appropriate characterisation of directors outside of the representative pool, and should be maintained.”
Elsewhere in its submission, the AIST backed retention of the existing arrangements around default funds under modern awards, including the role of the Fair Work Commission.
“AIST supports the existing model for the default superannuation fund system in awards, and the role of the Fair Work Commission; however we submit that some of the Productivity Commission’s recommendations could also be implemented to improve the model,” it said. “AIST is also keen to ensure that unnecessary duplication is avoided and that parallel bureaucracies are not created.”
