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.  In the past five years, several funds  have become large and complex, with  some even running their own internal  investment teams.

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