The federal government’s proposed requirement for Australian Prudential Regulation Authority (APRA)-regulated superannuation funds to have an independent chair and one-third of their boards made up of independent directors has been welcomed by two SMSF industry bodies.
SMSF Association chief executive Andrea Slattery said improving the governance of superannuation funds was crucial and the government’s announcement was a positive step in achieving that aim.
“Increased independence of superannuation fund boards should allow those saving for their retirement, or drawing down on their savings in retirement, more confidence that their funds are being managed and invested in their best interests,” Slattery said.
She added the importance of improved governance of super funds could not be underestimated given the $2 trillion currently held in retirement savings, with that asset base expected to grow to $9 trillion by 2040.
“It is also essential that superannuation funds have a high standard of governance in light of the generous tax concessions they receive to encourage people to grow their retirement savings and save for their future now,” she said.
Consumer advocacy group the SMSF Owners’ Alliance echoed this sentiment, saying the move would help manage conflicts of interest and make decision making for APRA-regulated funds more objective.
“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,” the lobby group said in a statement.
“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.”
Further, the consumer advocacy body said it thought the government’s proposal would improve the transparency of the larger super funds and stressed it was imperative for the draft legislation to include a proper definition of ‘independent’.
