AIST influences policy to make Australia’s
super system fair & sustainable for everyone.

 

Best practice governance

AIST is committed to promoting best practice governance in Australia’s profit-to-member superannuation sector. Fundamental to this is supporting the unique representative board structure that is the defining feature of profit-to-member super funds. AIST supports best practice governance through our Governance Code and specialised programs including AIST’s Trustee Director Course, year-round trustee training and education, toolkits and the Trustee of the Year Award.

Representative Model

The profit-to-member superannuation fund sector is unique in Australia as it operates under a governance model with equal numbers of employer and employee representatives appointed or elected to the trustee board.

The model has an unrivalled track record, delivering out-performance through a members-first culture, in-built diversity of thought and real-world experience on the board.  Direct representation of super fund members on the board promotes decisions aligned to members’ interests. Representative boards include leaders from the industries where their members work. These are key reasons why profit-to-member funds avoid the systemic conflicts observed in bank-owned super funds and other parts of the super sector. By making decisions in the interests of super fund members, funds with representative boards have consistently outperformed funds with different, non-representative governance models over the short, medium and long-term. Evidence of the outperformance of funds with representative boards has been found by the Productivity Commission.

In addition to representative directors, some profit-to-member funds appoint ‘non-representative’ or independent directors. AIST’s Governance Code gives the flexibility to funds to appoint up to one third independent directors.

Good governance leads to better decisions and within a superannuation environment it can enable:
  • Prioritisation of a long-term investment strategy which maximises return to members;
  • Lower fees and costs;
  • Enhanced engagement and communication leading to better members services;
  • Stronger compliance with regulatory requirements reducing need for regulatory intervention;
  • More effective risk management; and
  • Stronger accountability of decision making and transparency of how decisions are made.

The 2018 Financial Services Royal Commission highlighted that the relationship between trustees and members is not immune to profit conflicts. Many examples were identified in the retail sector funds were representative boards are not used.

AIST’s Actions to Advance Best Practice Governance

AIST is committed to continuous improvement of our successful governance model. This is undertaken in a range of ways:

  • Implementation of the Governance Code: Our principles-based Code goes beyond current regulatory requirements, creating a new standard of best practice in Australia.
  • Director training and education.
  • Guidance in the following areas: board structure, recruitment and succession planning, management of conflicts of interest, board committees, relationships with nominating bodies and service providers, remuneration policy and disclosure, governance charters and codes of conduct, assessment and monitoring of the fitness and propriety standards and disclosure and transparency matters.

AIST’s Governance Code is a principles-based framework which goes beyond current regulatory requirements cementing a high benchmark of practice in Australia. The Code, which consists of 21 requirements, promotes continuous improvement in governance practice and aims to protect and improve outcomes for members.

As part of the implementation of the Code, AIST appointed a three-member independent Governance Code Monitoring Panel responsible for monitoring, engagement, reporting and other Code-related activities.

Key milestones

The Code became mandatory for AIST member on 1 July 2018. Funds will report on their FY19 compliance with the Code requirements by 30 September 2019.

AIST funds were invited to take part in a 2018 voluntary reporting pilot to test the reporting approach and identify leading practice. Pilot funds reported a high level of compliance with the Code requirements and the Panel’s evaluation of the reports is found in the 2019 Voluntary Pilot Report on Compliance with the AIST Governance Code.

The Code will be reviewed on a three-yearly basis to ensure that it continues to meet its objectives of improving governance; ensuring that the culture of the profit-to-member sector is fully supported by governance structures; and improving accountability and transparency. The first review is scheduled to take place in 2021.

2019-2021-Governance-Code-Milestones.png

Governance Code resources

The Code Guidance provides legal and regulatory context and commentary on each requirement.

FAQs include special guidance for public sector funds.

2019 Reporting Template provides a structured report designed for use by governance personnel responsible for preparing and submitting a fund’s compliance report for approval of their Board. It also assists the Panel to analyse the profit to member sector’s governance practices.

2019 Helpful Hints for Reporting includes models for satisfactory explanations of compliance as well as leading practice examples for each of the 21 requirements.

Further information on the Code and/or reporting processes is available by contacting Holly Lindsay, AIST Senior Manager, Governance on +61 3 8677 3855 or by emailing govcode@aist.asn.au

The three-member monitoring panel is responsible for monitoring, engagement, reporting and other related activities in relation to AIST’s Governance Code. The Terms of Reference detail the Panel’s responsibilities and obligations.

The Panel Secretary is Holly Lindsay who can be contacted on hlindsay@aist.asn.au. Queries can also be sent to: govcode@aist.asn.au

Panel Members

Greg Brunner (Chair) – Greg has more than 20 years’ experience working for the World Bank and the Australian Prudential Regulation Authority (APRA). Mr Brunner was the chair of APRA’s Superannuation Industry Working Group from 2011-2016, and helped develop governance prudential standards and guidance.

Maree O’Halloran – Maree is a past employer-representative director of several profit -to-member funds, including her most recent role at HESTA for 5 years, which concluded in 2015. Ms O’Halloran is a former recipient of AIST’s Trustee of the Year award.

Michelle Wright – Michelle has nearly a decade of experience as a non-executive director across a range of financial service organisations and has experience serving on ethical standards boards in the healthcare sector.

AIST is committed to helping its members maintain strong governance practices that benefit the members of profit-to-member superannuation funds. For this reason, AIST has developed a series of tools for its members.

Governance & Operational Toolkits provide practical tools to assist with the development and implementation of prudential requirements, and other fund operational matters.They include tools such as checklists, flowcharts, diagrams and decision trees to assist trustees with understanding and applying their obligations.

Governance Toolkits are currently available on the following topics:

Business Continuity Management

Conflict Management Framework

Fit and Proper

Governance

Insurance Management Framework

Investment Governance

Investment Language

Outsourcing

Remuneration

Risk Management

Transitioning to the Australian Financial Complaints Authority

Website Disclosure

Merger Toolkit and  checklists in editable word format​

In December 2015 the Australian Institute of Superannuation Trustees (AIST) and Industry Super Australia (ISA) asked Bernie Fraser to lead a review of governance arrangements in respect of profit-to-member superannuation funds and to propose a best practice Governance Code for such funds.

Since that time Mr Fraser has engaged in an extensive consultation process with representatives of the industry superannuation funds and their union and employer sponsoring organisations, regulators, international experts, Senate cross-benchers and other parliamentarians.

On February 16, 2017 Bernie Fraser released his final report. 

The review found profit-to-member superfunds’ governance model and member-first ethos is central to their persistent outperformance and avoidance of scandals affecting other parts of the finance sector.

The review also found that the Government has not adequately made the case for a mandatory quota of independent directors and members’ interests will be better served through a focus on directors’ values, skills and expertise.

To this end Mr Fraser has recommended Australia’s profit to member superannuation funds prioritise values, skills and expertise in a mandatory principles-based governance code to commence on 1 July 2017.

Such a code has been developed separately by AIST but in tandem with the Fraser review following a commitment made by AIST and Industry Super Australia to the Australian Senate.

For more information contact AIST on 03 8677 3800 or info@aist.asn.au

AIST is pleased to provide a complementary service for experienced professionals and interested parties to register their interest for trustee director positions on profit-to-member superannuation boards. This service also grants AIST member fund Chairs direct access to those that have expressed their interest through the service.

The role of a trustee director can be a rewarding experience, offering individuals exposure to the various facets of the superannuation and finance sectors.

If you are a profit-to-member superannuation fund Chair interested in recruiting a new trustee director, please read the following: 

  • As a benefit of AIST membership you have access to the Trustee Register and are free to search the Register at any time to view the applications of persons interested in becoming a trustee director.
  • AIST does not promote board positions through this service.
  • AIST takes no responsibility for the quality of candidates who utilise this service and does not verify the information submitted.
  • Chairs and Funds are responsible for conducting their own due diligence and ensuring any potential directors meet the fund's fit and proper requirements.
  • This service is made available solely for the purpose of filling vacancies on profit-to-member superannuation fund boards.
  • Chairs are reminded to respect the privacy and confidentiality of the applicants on the Register.

AIST member fund chairs wishing to use this member benefit can contact AIST’S Trustee Governance department on 03 8677 3800 to receive a username and password. Once you have a username and password you are free to log in to the Register at any time.

Chair login

If you are interested in being on the board of a profit-to-member superannuation fund and would like to register your interest online, please read the following:

  • You must agree to have your CV and online application details shared with potential recruiters. These recruiters will be the chairs of superannuation funds within AIST's membership.
  • AIST does not actively seek to find positions for any candidates who submit their details.
  • Once you have registered and submitted an application you will be able to update it at any time by logging in with your username and password.
  • We recommend keeping your application up-to-date and consider reviewing it on an annual basis.
  • You must be an Australian resident to be eligible for consideration.
  • Being a trustee director of a superannuation fund is an enormous privilege and comes with great responsibility. AIST offers a range of courses for people wishing to enter this field or to update their skills and knowledge. See more information.

Apply now

Related Content

AIST's Submission on Reforms to Superannuation Governance
AIST's Submission on Reforms to Superannuation Governance Prudential Framework
Good governance comes from principles: AIST
AIST’s submission to Strengthening Trustee Arrangements Bill 2017
Independents bill still a bad idea
AIST's Response to Productivity Commission Draft Report
Article Media release Submissions Podcasts Research