At a time when boards across Australia have come under increasing pressure to review the high sums paid to top executives, the cover story in the October edition of Investment & Technology found a number of people arguing that the pay of executives in superannuation could probably be increased.
This month, we examine the great disparities in how the boards themselves are remunerated. For instance, at the $23 billion industry fund UniSuper, more than one director is paid a six-figure salary. Meanwhile, at the $13 billion retail fund REST Super, all board members are volunteers. STEPHEN SHORE investigates what super trustees are paid and why.
Over twenty years ago, when unions first won the right to set up industry funds to provide for people’s retirement, the goal was to maximise workers’ retirement savings. In keeping with the idea of “all profits for members”, most board directors began as volunteers. While all industry funds say that they have never deviated from this founding principle, over the past two decades some funds have evolved to the point where the position of trustee could be described as lucrative. The first trustees to be ‘paid’ were employer representatives, who came onto boards in about 1986.
Employers realised that rather than continuing to fight against compulsory super, it would be better to secure an equal representation on industry fund boards to balance the influence of the unions. Some companies made allowances for executives to attend board meetings during business hours, and some funds compensated the companies for the time the board kept executives away from work. “During the 1980s a quarterly meeting was not seen as particularly onerous,” says Howard Rosario, chief executive at Westscheme. “Most board members were volunteers, or paid very little.”
As the funds grew and super contributions became legislated, the role of the trustee became more complex. More time was required of trustees, and super funds began to realise that people needed to be paid for the work that they did. In addition to attending board meetings, trustees were expected to keep up to date on complex financial, statutory and compliance developments. Fiona Reynolds, chief executive at the Australian Institute of Superannuation Trustees, says that by the time of the Superannuation Industry Supervision legislation and the creation of the Australian Prudential Regulation Authority in the early 1990s, board members of super funds had to be skilled and commit to the role in a way that a director of any other business would.