Independent director quotas a backward step: AIST

Imposing quotas on the board of not-for-profit superannuation funds is a backward step and could disrupt the performance of the funds, the Australian Institute of Superannuation Trustees (AIST) believes.

AIST chief executive, Tom Garcia, hit out at the proposed reforms, which were made in the Financial System Inquiry final report earlier this year, and in Jeremy Cooper's 2010 review.

"These changes are not about genuine reform," he said. "This is ideologically-driven policy that is not based around evidence and has nothing to do with improving returns for members.

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"The OECD has concluded that member representatives should be encouraged to ensure a better alignment of interests between the fund and the members.

"Removing the legislative requirement for member representation takes Australia in the opposite direction to the rest of the world."

In its submission to the Senate Economics Legislation Committee on reforms to super governance, the AIST highlighted results from the Mercer Melbourne Global Pension Index, which found the majority of top performing pension funds internationally, had an equal representation model, or member representation on the board.

Industry Super Australia (ISA) has also hit out at the lack of evidence to support the introduction of one-third independent directors to the boards of not-for-profit funds.

ISA chief executive, David Whiteley, said the Trustee Governance Bill "dismantles the governance structure of the successful not-for-profit super sector, while leaving the scandals and underperformance of the bank-owned sector unaddressed".

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