The question of how many independent directors sit on the board of not for profit superannuation funds would become academic if super fund members actually got to elect directors to their superannuation fund boards, according to the Governance institute of Australia (GIA).
The Governance Institute has used a submission to the industry funds-sponsored governance inquiry being run by former Reserve Bank Governor, Bernie Fraser, to argue that giving fund members the right to vote for trustee directors would mean better governance outcomes for the funds.
“There’s been a great deal of controversy around how many independent directors should be on the board of a NFP super fund and what constitutes ‘independence’, but that debate could be resolved if members were simply granted the right to elect directors of their choice,” GIA chief executive, Steven Burrell said.
He said there could be no disputing the independence of the directors, because the members themselves would have been responsible for electing them.
“Good fund governance starts with the basic principle that members must have a voice. Yet at the moment, members of most funds have no say in who represents their interests. That is currently decided by third parties,” Burrell said.
He pointed out that members of other not for profit organisations had long had the ability to vote in directors of their choice and to hold them accountable with their voting power.
“There’s no reason why NFP super fund members should not have the same rights in view of the growing size and importance of the retirement savings industry,” he said.
“If, as the announcement of the Fraser Review rightly points out, a key distinguishing feature of NFP funds is ‘the over-riding primacy of members’ interests’, there can be no basis for continuing to deny fund members the right to vote directly for directors they believe will act in their best interests,” Burrell said.
