Super boards at risk when delegating away investment responsibility

Opting to delegate away investment responsibility from superannuation boards could lead to problems in the future, according to Media Super.

Speaking at the Australian Institute of Superannuation Trustees conference, Shauna Black, chair of the Media Super investment committee, said super funds could face increased oversight from the Australian Prudential Regulation Authority (APRA) in the future if they went down this route.

Industry funds in particular, she said, often had a varied mix of board members who might not have backgrounds in super. It was therefore crucial they were brought up to speed on investment literacy.

Media Super had 11 board directors, a mix of employer and member representatives and independent directors.

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Black said: “It’s beholden on the fund to make sure you improve the investment literacy of those board members. It means using layman’s language, reducing acronyms and increasing their knowledge so they feel real ownership of what is happening in the investment sphere.

“It’s the purpose of the investment committee to bring everyone up to speed as much as they can by talking in a language that people can understand.

“I have a policy of refusing to use acronyms because they are insider speak, which is great for the insiders but can alienate other people who don’t have that day-to-day understanding.”

She said any board which took the decision to avoid investment decisions could face problems in the future.

“I think any board that says it is going to delegate entirely away the investment responsibility is going to face some issues and perhaps more attention from APRA.”