A prominent industry fund executive has accused the Federal Government of a political stunt over its plans to shake up superannuation boards.
Draft legislation put forward by Assistant Treasurer Josh Frydenberg proposes at least one third of superannuation fund board directors be independent.
The proposal also calls for superannuation trustee boards to have an independent chair.
The plans are being seen as an attack on union-backed industry funds, which mainly have joint employer and union representation on their boards.
Australian Council of Trade Unions (ACTU) and the Electrical Trades Union have slammed the Government’s plans and have called on Labor, minor parties and the Greens to vote against the draft legislation.
Former ACTU official Garry Weaven and the chairman of IFM Investors — a global fund manager owned by Australian superannuation funds — was at the forefront of the creation of industry funds.
Mr Weaven said the Government’s plans to make superannuation boards more independent were unnecessary because industry funds have outperformed retail superannuation funds.
However, industry and public sector superannuation funds have lower fees than retail superannuation funds.
“This looks like just some sort of trumped-up political stunt or a solution in search of a problem to me,” he told PM.
“With all the problems going on in the banks, the broking industry, the insurance industry and all of that stuff which is anti-consumer, the one area that has actually outperformed the banks and the retail funds is the one that the Government is choosing to have a go at,” he said.
But Mr Weaven said he did not think the changes, if passed, would have a big impact on the makeup of industry fund boards.
“I’m not saying this will have a big, dramatic impact,” he said.
“It’s just so insulting to all of those trustees who’ve tried and tried very successfully to get the best result, for members, in terms of their long-term retirement benefits.”
Some industry funds already have independent directors and independent chairs such as construction industry fund CBUS and UniSuper.
CBUS chairman Steve Bracks was not available for an interview.
Proposals to improve corporate governance of funds
UniSuper is an industry superannuation fund for the higher education industry.
It already has an independent chairman and three independent directors.
Chief executive Kevin O’Sullivan said the Government’s plans will have little impact on UniSuper.
“UniSuper currently has 11 directors and we are almost already at the … one-third that the Government is pushing for,” he said.
“We have three independents on our board already, so it’s not a material change for us.”
Mr O’Sullivan declined to comment on whether he saw the proposals as an attack on industry superannuation funds.
Government said the plans are in line with similar recommendations by independent reviews of the superannuation system by former Australian Securities and Investments Commission executive Jeremy Cooper and the chairman of the Financial System Inquiry, David Murray.
The Financial Services Council, which represents the finance industry, said the proposals will improve corporate governance at superannuation funds.
Construction employers group Master Builders Australia gave its support to the proposals.
“The Board of Master Builders Australia supports these reforms to ensure that industry super funds continue to provide the best possible outcomes for members’ retirement incomes,” chief executive Wilhelm Harnisch said in a statement.
If the new rules are passed, existing superannuation funds would have three years to make the changes, but new funds set up from July 2016 would have to adhere to the new legislation.