Super in the spotlight


From discussion about changing the traditional equal-trustee representation system through to the introduction of new, no-frills MySuper funds and revamped administration processes, super is embarking on a new era.

The sweeping reforms are also likely to lead to fresh scrutiny on the remaining corporate super funds, according to Scott Hartley, managing director of Plum Financial Services, which provides superannuation outsourcing services.

“It is another set of changes that is likely to cause employers to reconsider whether retaining an in-house fund is sensible going forward,” he says.

A move to listed territory?

Both the Actuaries Institute and the Australian Institute of Company Directors have strongly come out in favour of independent trustees. They believe large super funds — in particular industry funds and master trusts offered to the public or used by corporates outsourcing their super fund — must have the same governance standards as public companies.

Actuaries Institute chief executive Melinda Howes says the representational model still has its place.

“It is still quite suitable in some situations, but it is less appropriate for the bigger public-offer funds. Superannuation funds are becoming financial behemoths and over time the big funds will grow to be bigger than our biggest insurers and banks. Good governance in super is about members having confidence in the system, doing the right thing and being seen to do the right thing,” Howes says.

At the other end of the spectrum, the Australian Institute of Superannuation Trustees (AIST) supports retention of the status quo where trustee directors are selected as representatives of the members and employers. “Governance in the equal representation system works well and has served members well,” says AIST’s chief executive, Fiona Reynolds.

Reynolds agrees having the best possible governance standards is essential. “Given the amount of money and our responsibility for people’s retirement, it is only right for standards to be high.” But she believes super should not be a “one-size-fits-all approach and the flexibility in the system is very valuable”.

“The not-for-profit sector of the super industry has outperformed, so why are people questioning the validity of its governance approach? The directors are there with the sole aim of looking after members.”

“With the equal representation model, there is a lot of misunderstanding about independence,” says Reynolds. “Trustees are there to represent the members of the fund, so why would you want to be independent of them? The members own the fund.”

When employees benefit

With reform a key topic in the super industry at the moment, debate is also continuing about how best to ensure employees achieve adequate retirement incomes and the role of employers in that process.

Scott Hartley believes employers, member engagement and the role of super as an employee benefit are vital parts of the equation.

As the manager of super plans for 80 of Australia’s largest corporations, Hartley has a clear view on the role of super. “Our experience has shown that the single biggest factor in achieving retirement adequacy is member engagement. And increasingly member engagement starts with the employer.”

Hartley is also seeing what he terms as “enlightened employers” taking this view. “It shows employers are interested in their employees beyond their current employment and into retirement.”

Research undertaken by benefits consulting firm, Mercer, found Australian employees currently give low scores to their organisation’s efforts to aid their retirement readiness.

Hartley believes these views highlight the important role of super as an employee benefit. “You can use lifestyle benefits and paying people more and they are important as part of the remuneration package, but for employees their retirement savings are a very important part of it. Employers are learning it is a big opportunity for employee engagement.”

Quality super and financial advice offerings are “a very powerful tool” for companies seeking to connect with their employees, he says.

Super is also being used as a potent attraction and retention tool. “It is still a very competitive labour market in Australia and super and retirement benefits are a key plank in the attraction of talent to an organisation,” Hartley notes.

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Super in the spotlight


From discussion about changing the traditional equal-trustee representation system through to the introduction of new, no-frills MySuper funds and revamped administration processes, super is embarking on a new era.

The sweeping reforms are also likely to lead to fresh scrutiny on the remaining corporate super funds, according to Scott Hartley, managing director of Plum Financial Services, which provides superannuation outsourcing services.

“It is another set of changes that is likely to cause employers to reconsider whether retaining an in-house fund is sensible going forward,” he says.

A move to listed territory?

Both the Actuaries Institute and the Australian Institute of Company Directors have strongly come out in favour of independent trustees. They believe large super funds — in particular industry funds and master trusts offered to the public or used by corporates outsourcing their super fund — must have the same governance standards as public companies.

Actuaries Institute chief executive Melinda Howes says the representational model still has its place.

“It is still quite suitable in some situations, but it is less appropriate for the bigger public-offer funds. Superannuation funds are becoming financial behemoths and over time the big funds will grow to be bigger than our biggest insurers and banks. Good governance in super is about members having confidence in the system, doing the right thing and being seen to do the right thing,” Howes says.

At the other end of the spectrum, the Australian Institute of Superannuation Trustees (AIST) supports retention of the status quo where trustee directors are selected as representatives of the members and employers. “Governance in the equal representation system works well and has served members well,” says AIST’s chief executive, Fiona Reynolds.

Reynolds agrees having the best possible governance standards is essential. “Given the amount of money and our responsibility for people’s retirement, it is only right for standards to be high.” But she believes super should not be a “one-size-fits-all approach and the flexibility in the system is very valuable”.

“The not-for-profit sector of the super industry has outperformed, so why are people questioning the validity of its governance approach? The directors are there with the sole aim of looking after members.”

“With the equal representation model, there is a lot of misunderstanding about independence,” says Reynolds. “Trustees are there to represent the members of the fund, so why would you want to be independent of them? The members own the fund.”

When employees benefit

With reform a key topic in the super industry at the moment, debate is also continuing about how best to ensure employees achieve adequate retirement incomes and the role of employers in that process.

Scott Hartley believes employers, member engagement and the role of super as an employee benefit are vital parts of the equation.

As the manager of super plans for 80 of Australia’s largest corporations, Hartley has a clear view on the role of super. “Our experience has shown that the single biggest factor in achieving retirement adequacy is member engagement. And increasingly member engagement starts with the employer.”

Hartley is also seeing what he terms as “enlightened employers” taking this view. “It shows employers are interested in their employees beyond their current employment and into retirement.”

Research undertaken by benefits consulting firm, Mercer, found Australian employees currently give low scores to their organisation’s efforts to aid their retirement readiness.

Hartley believes these views highlight the important role of super as an employee benefit. “You can use lifestyle benefits and paying people more and they are important as part of the remuneration package, but for employees their retirement savings are a very important part of it. Employers are learning it is a big opportunity for employee engagement.”

Quality super and financial advice offerings are “a very powerful tool” for companies seeking to connect with their employees, he says.

Super is also being used as a potent attraction and retention tool. “It is still a very competitive labour market in Australia and super and retirement benefits are a key plank in the attraction of talent to an organisation,” Hartley notes.

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