The government has used MySuper to enforce the disclosure of superannuation executive and trustee salaries, and to impose rules on fund-manager performance fees.
Super fund executives and trustees, which oversee much of Australia’s $1.3 trillion in mandated retirement savings, will be forced to disclose how much they are paid and show how they invest fund members’ money, according to the third phase of draft MySuper legislation released on Friday 27 April.
The government wants MySuper funds, which will oversee billions of dollars when they become the default managers of superannuation savings from July 1, 2013, to be governed better than existing funds by revealing executive and trustee pay and funds’ investment holdings.
“MySuper products are intended to set a new benchmark for superannuation in the level of transparency and comparability of key-performance information,” the draft legislation, a major part of the Cooper Review-based Stronger Super reforms, states.
“The review identified a lack of transparency, comparability and, consequently, accountability in Australia’s superannuation system,” according to the government. “Portfolio disclosure in Australia is unduly opaque and does not meet global best practice.”
The government aims to improve disclosure by forcing funds to show more information about investment options and to provide risk information that helps explain past returns.
Funds would be required to continuously publish a “product dashboard” showing the targeted investment returns of different options and how often these goals have been met. Investment risk, liquidity and fees across all options will also be explained, and full portfolio holdings must be shown within 60 days of two reporting dates, June 30 and December 31.
“Standardised disclosure of key information will allow members to easily compare products and thus make informed choices,” the draft legislation says. The government will consult industry stakeholders on the proposed laws and has set a 16 May deadline for responses.
New disclosure regime
MySuper may force all superannuation funds to provide the following information:
Net returns of all MySuper and choice products for the past decade.
Names and brief biographies of each director or trustee, and their record of board-meeting attendance.
Funds’ proxy voting policies and practices.
Names of all outsourced service providers, such as consultants, fund managers and custodians.
Materials including the trust deed, annual reports, actuarial reports and audited financial statements.
The peak body for industry superannuation, the Australian Institute of Superannuation Trustees, wants the new rules to reveal the salaries of retail superannuation executives and trustees that are paid for this work through related trusts or the parent company, says chief executive officer Fiona Reynolds.