The boards of these funds required a new level of expertise again, and brought on independent directors such as Bernie Fraser, former governor of the Reserve Bank (AustralianSuper, Cbus), and Chris Cuffe, former chief executive at Colonial First State (UniSuper). A 2008 APRA survey found that these days the highest priority for most trustee boards is “ensuring compliance with legislation and regulation”, which takes an average of 23 per cent of the boards’ total time. “The super industry has changed,” says Fiona Reynolds, chief executive at the Australian Institute of Superannuation Trustees.
“Funds are getting to over $10 billion, in some cases up to $30 billion, and some are realising that they need to look externally for expertise.” The aforementioned APRA survey, Superannuation fund governance: Trustee polices and practices, published in May 2008, looked at the boards of 187 of the major superannuation funds, representing about 85 per cent of the nation’s pension assets. It found that on average, super funds have seven directors.
Each fund holds an average of 8.1 board meetings per year, with each board meeting having a mean duration of 3.6 hours. The meetings are supplemented on average by 12.8 sub-committee meetings per year, which lead to each trustee director spending on average 98.8 hours per year on fund matters outside board meetings. McGuirk Management Consultants is a firm that advises super funds on what might be an appropriate level of compensation for all this work. Its principal, Terry McGuirk, says that most of the differences in levels of remuneration can be generally explained by fund size, and what comparable organisations are paying in the private sector.
According to MMC’s 20 Fund Executive, Staff & Trustee Remuneration Survey, the average trustee chair receives a salary of $52,969, while the average trustee director gets $28,794. APRA does not distinguish between chairs and directors in its survey, but estimates the average trustee salary is about $38,000. Slightly below average is the Seafarers Retirement Fund (SRF), whose board members were volunteers until July 1, 2007. Chief executive Peter Robertson says that the demands on the board have been growing with the increasing complexity of the industry, so the fund decided to pay the employee sponsors of their directors for the time away from work.
SRF pays the employer of each director of its eight-person board $30,000, and the chair $40,000, regardless of the price the company they work for may place on their time. The top 10th percentile of funds with more than 200,000 members have a median director salary of $86,303. The board members at UniSuper would be among the most well remunerated, with one (most likely the chair) receiving between $140,000 and $179,000, and another between $110,000 and $139,999 in 2008. The other 10 directors have a range of salaries from between $90,000 and $99,000, to between $20,000 and $29,000.