About one-third of superannuation trustee boards are unlikely to make changes seeking independent directors while some of those who will add independent directors would only do so if it became a legal requirement.
This reluctance to open trustee boards to independent directors flies against recent Government discussion paper which has suggested the addition of independent directors will become mandatory according to Mercer Partner and Senior Governance Consultant Pam McAlister.
The findings are part of an on-line Superannuation Governance conducted by Mercer which was sent to 95 superannuation funds. Of this number 33 funds responded from across industry, corporate, public sector and retail funds.
Mercer said the results, which were drawn from survey responses supplied by chief executives, fund secretaries and governance, risk and compliance managers, found that at present 57 per cent of super boards have no independent directors.
The survey found that 11 of the 19 funds who do not have independent directors stated they are not likely to make changes, while the remaining eight said they would do so in the next two years with five stating they would make changes under if compelled by law.
McAlister said there was little reason for trustee boards to not make the changes and they would need to respond to the changed environment around superannuation.
“It’s hard to argue super funds should be held to a different standard of governance to those applicable to Australian listed companies and Insurers. They all have requirements for a majority of independent directors on the board, but we believe the super industry should remain focused on ensuring the right mix of skills and experience, not just on independence, however that concept may be defined,” McAlister said.
“It’s a different world today for Trustee Boards - they need expertise in investment, governance, risk management, remuneration, insurance and marketing, along with the interpersonal skills to enable a diverse group of people to work seamlessly together.”
Fourteen funds reported they had independent directors with eight stating they had an independent chair of a committee, four had an independent chair of the board and a committee while three had an independent director who did not chair a board or committee.