Increased transparency, from the makeup and potential conflicts of boards, to pay and investments is likely to be a theme for the funds that manage about $1.4 trillion in retirement savings, says BT Financial Group.
BT says the Australian Prudential Regulation Authority is focused on improving governance standards at all superannuation trustees.
That means the independence of boards will be examined as well as the skill set of board members and their potential conflicts of interest, says BT, whose funds under management and funds under administration are about $90 billion.
“If you don’t have the very best people in this country managing superannuation then we’re in trouble,” says Melanie Evans, head of superannuation and platforms at BT.
With the funds for Australia’s compulsory retirement savings to more than double to $2.8 trillion by 2020 amid recent losses by funds – the typical superannuation fund lost 2.5 per cent in 2011 – the country’s pension scheme is coming under increased scrutiny.
“Transparency for transparency sake makes little sense,” says Evans. “It is all about communicating effectively and properly.”
Evans says costs, the Cooper Review says a superannuation fund can achieve costs of 66 basis points per member, should not be the only focus of politicians.
Net returns are what matters to superannuation investors, she says.
The top 30 industry superannuation funds have on average 115 basis points in costs per member, according to Chant West.
“A race to the bottom on costs will not ensure Australians will retire with more money,” says Evans.
“There should be a change in the conversation away from lowering costs to delivering better net returns,” she says.