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Union super funds the real foxes in the henhouse
Thursday 14 September 2017
All superannuation funds need independent directors to safeguard the retirement savings of millions of Australians from vested interests.
A report released today calls for governance rules to be tightened to ensure that funds make decisions that enhance their members’ savings rather than pursue the interests of unions and fund managers.
The report, Guarding your nest egg, published by the Menzies Research Centre, recommends mandating a third of independent directors and an independent chair on all superannuation fund boards should be a minimum requirement.
“Industry super funds have spent millions on a lavish advertising campaign designed to portray privately operated funds as the fox in the hen house,” said Mr Nick Cater, Executive Director of the Menzies Research Centre.
“This report makes clear that union dominance on boards poses the biggest threat to your nest egg.
“It is a case of jobs for the boys - with the emphasis on boys. Incredibly their boards have some of the lowest proportions of female directors in the country.
“They lack the professional expertise, diversity and experience that savers have a right to expect.”
On retail fund boards more than a third of the board are women, while in industry funds there are barely a quarter,” said Mr Cater.
The report by Associate Professor David Morrison directly rebuts the review by Bernie Fraser commissioned by industry superannuation funds which argues that current arrangements should continue.
“Mr Fraser’s recommendations are at odds with concerns raised by two previous Government Inquiry Reports, both recommending improvements with respect to director independence and transparency.
“Those recommendations are consistent with adverse findings within both the retail and industry superannuation sectors and findings around directors outside the sector,” Associate Professor Morrison said.
The report dismisses the claim that industry super funds produce better returns as an “apples and oranges” comparison.
Union-backed funds have a younger cohort of members, allowing them to pursue aggressive growth strategies, while other funds have older members, many in retirement and adopt conservative investment decisions geared to wealth preservation.
For more information contact Fred Pawle
About the Menzies Research Centre
The Menzies Research Centre seeks to contribute to and to lead debate on public policy issues. It does not shy away from tackling the hard questions and difficult issues that will challenge the future prosperity of our nation. The Centre is charged with promoting principles of individual liberty, free speech, competitive enterprise, limited government, democracy, and the family as the foundation of a stable society. The objectives of the Centre are promoted by publishing papers, convening lectures and conferences and coordinating policy reviews.
About the author
Associate Professor Morrison is an interdisciplinary researcher whose interests lie at the intersection of taxation law, corporate and insolvency law, bankruptcy, and finance law as those interests apply to finance, and the economy, the recipient of three ARC research grants and a UQ Vice-Chancellors Research Excellence award. Associate Professor Morrison has held over 30 research grants and has published in excess of 100 papers, including refereed journal articles. He is co-author of Thomson Reuters Voluntary Administration. Associate Professor Morrison holds the degrees of BCom, LLB, MFM, LLM, GCEd and PhD (Qld), he holds the professional qualifications of Barrister-at-law, Chartered Accountant (CA), Chartered Tax Advisor (CTA) and Registered Trust and Estate Practitioner (TEP).
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