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ASFA's latest governance paper released
The Association of Superannuation Funds of Australia (ASFA) has released its latest Governance Best Practice Paper.
The governance benchmark for superannuation trustees should be higher than that of listed companies because of the compulsory nature of the system, and the benchmark for trustees is higher due to their fiduciary obligations, according to ASFA chief executive Pauline Vamos.
“What is best practice in governance is constantly changing. Stakeholder expectation as well as the environment in which funds operate constantly changes. Competition between funds is fierce and the membership is becoming more diverse in its needs,” she said.
“The industry itself is addressing calls for increased efficiency, transparency and accountability, forcing many fund trustees to address their finance and operations models. This leads to changes in the behaviour of funds and heralds a new era in governance.”
The paper outlined 47 good governance practices across five key themes, according to Aon Hewitt principal and actuary Jenny Dean, who was part of the working group that developed the new guidelines.
The first theme was around having the right people in the right positions, making it clear who was responsible for what role and ensuring those people were appropriately qualified for that role.
The second theme was about making the right decisions and avoiding conflicts of interest and conflicts of duty, which could be avoided with full disclosure, she said.
The third theme was documentation, the fourth was around transparency and making sure the fund was run in the best interests of members and providing full disclosure around governance practices. The final theme was around checking that governance practices were working and being implemented correctly.
Also in the working group was Clayton Utz Lawyers partner Zein El Hassan, who said it was important to have clear separation between members and those who run the fund.
David Graus, ASFA’s general manager, policy and industry practice, said it was important that industry takes the lead in terms of improving fund governance and outcomes for members.
He encouraged all trustees to consider the recommendations in the paper. There was always a one size fits all solution but if trustees were not doing something that was recommended in the paper, it was important to raise that at a board meeting and ask why they’re not doing it and if it was something that needed to be addressed.
AUTHOR
Mike Taylor
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