Keep your hands off our super

It would be great for the political sides not to play politics with superannuation. Superannuation is too important, it’s all about retirement incomes for employees and that should be sacrosanct.

But unfortunately politics is played and is played regardless of any arguments about merit, good sense, or evidence.

The Coalition announced before the election their commitment to destroying the equal representational model where half the board represents employees and half the board represents employers. This will be one of the big issues of 2014.

The Government’s strategy to get a proportion of their own people on superannuation boards, under the guise/façade/trick/ruse of there being a need for "independent" directors has nothing to do with competence or performance and everything to do with politics and payback.

There is no evidence of the competence or otherwise of trustees. Funds are well-managed and there is none of the bad behaviour, deception or incompetence famously displayed on company boards. There is considerable evidence about the competence of company directors – the sorts of people you could expect to be putting their hands up to get a gig as “independents”.

The Coalition vigorously opposed the introduction of the SGC, the introduction of industry superannuation funds and the subsequent increases in the SGC. At every significant social advance for employees and their retirement incomes, the Coalition was predicting the sky would fall, companies would go broke and the economy would suffer. They were wrong and now Australia with its compulsory superannuation system and the way it is managed is the envy of the world.

Philosophically the Coalition hated the idea of even equal representational superannuation funds (even though half the directors on those boards were representing employers anyway) managing money that should be managed by their Tory mates, in businesses that are established, not out of any interest or commitment to the retirement income of members, but to make a profit - to skim a nice big slice out of retirement incomes.

Hard to imagine how the big banks and insurance companies, with their primary purpose being profit, can satisfy that overriding provision in the SIS Act on the sole purpose being retirement income for members. That's not why they exist.

But now it's time for the Coalition to get square and get their mates’ snouts in the trough.

Leaving aside that under the SIS Act, all trustees are obliged to act independently (something the Coalition either doesn't understand or want to acknowledge), what they don't realise is that being a trustee on a superannuation fund is onerous, demanding both emotionally and intellectually and a rapacious devourer of time. It's not simply a sinecure.

As a trustee on LGS, directors are paid around $44,000. For a fund with around $7.4 billion FUM this is a fairly standard payment. For that, trustees are required to attend a monthly meeting with an agenda that can vary between 400 to 700 pages, meetings of the investment committee or the audit committee with agendas of up to 400 or more pages every second or third month. Trustees can't risk missing anything.

FSC licensing requires a significant contribution to training and it would be a fairly standard arrangement for trustees to attend three-day conferences like CMSF and/or ASI, and/or ASFA as well as a number of short courses and lunches over the year. That is a significant contribution for people who have other jobs. In my time, that sometimes meant three or four days out of the week away from my normal job but still trying to manage that remotely.

Tory mates who believe they were born to manage money and grow rich from it wouldn't dream of getting out of bed for $44,000 a year let alone make a contribution like this.

So, let's not confuse an ideological and political initiative with a concern about the competence of trustees. A review of what's missing and what could be provided in the current trustee system would be a useful first step. The Government won't find in the equal representational funds anything approaching the problems of the boards at HIH, Ansett, Centro, or Hardies, for example. And gee, hasn’t Qantas done a good job, starting from the time when the Chair and the CEO tried to strip it down and sell it to private equity sharks, and look at it now.

So, set up an enquiry and get some evidence first but I'd bet with greater certainty than picking what the ASX will be on 1 July, that it won't be a lack of independence.

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