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Towers Watson urges no immediate action on fund governance
Major consultancy, Towers Watson has examined the question of altering the governance arrangements of superannuation funds and concluded that while it might ultimately prove desirable, it does not need to happen yet.
In an analysis published this month, Towers Watson argues that "the case has not yet been made for the compulsory appointment of independent directors".
However it goes on to say such arrangements should, nonetheless, be encouraged as best practice "especially where it can add value to the overall composition and decision-making of the board".
"In instances where a board believes that it does not need any independent directors, we would suggest they document their reasoning for future reference, and consider communicating it to their members," the Towers Watson analysis said, suggesting the board would then be "very well prepared if the regulator was ever to question the composition of the board".
"We also believe there should be more public discussion on an appropriate definition of an independent director in order to obtain more widespread agreement in the industry," the analysis said.
"In the meantime, if a board chooses to appoint independent directors, then we suggest that they disclose to their members the independence criteria they adopted, and to regularly re-assess their independent directors against those criteria as circumstances may change over time," it said.
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The future of superannuation policy remains uncertain, with further reforms potentially on the horizon as the Albanese government seeks to curb the use of superannuation as a bequest vehicle.
Superannuation funds will have two options for charging fees for the advice provided by the new class of adviser.
The proposed reforms have been described as a key step towards delivering better products and retirement experiences for members, with many noting financial advice remains the “urgent missing piece” of the puzzle.
APRA’s latest data has revealed that superannuation funds spent $1.3 billion on advice fees, with the vast majority sent to external financial advisers.
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