Protecting the profit-to-member ethos of industry, government and corporate superannuation funds needs to be the top priority for the incoming chief executive of the Australian Institute of Superannuation Trustees, outgoing boss Tom Garcia says.
“If that profit-to-member way of being is not maintained, then there is not a huge difference between us and the retail funds,” he argues.
Garcia steps aside having recently completed a review of the organisation’s reason for existence, satisfied that it continues to fill an important niche.
“In 2016, we did a lot of research into what the value proposition was for AIST, and concluded that the distinguishing feature of our sector is the profit-to-member ethos,” he says. “Previously, our mission statement was to provide retirement income, but a peak body can’t actually do that, only a fund can do that, so we thought more carefully about what it was that AIST did to help funds deliver on that.”
The organisation is in the early days of a three-year strategic plan designed to focus its efforts on protecting and promoting the profit-to-member model of its member funds.
Central to that will be continuing to fight to preserve the sector’s traditional practice of letting funds’ employer and union stakeholders each appoint an equal number of trustees.
Garcia spoke to Investment Magazine in the days before he officially stepped down as AIST chief executive on March 10, 2017, after four years in the role, having previously been policy and regulatory manager for two years. He announced his resignation in December 2016, having accepted the role of head of product at AustralianSuper, the nation’s largest industry fund. Acting AIST chief executive Eva Scheerlinck has held the role of AIST executive manager, governance and stewardship, since 2010.
In February, to coincide with the release of the Fraser Review, which found no need to mandate independent trustees, AIST released a draft of a new governance code designed to lift the quality of boards at profit-to-member super funds. At AIST’s annual general meeting, to be held at its Conference of Major Superannuation Funds on the Gold Coast, March 22-24, 2017, members will vote on whether to adopt the governance code.
“I’m a bit sad I won’t be there to, hopefully, see that pass, but Eva [Scheerlinck] has put so much work into the governance code that it seems fitting it will be her,” Garcia says.
Eyes on group insurance as well
The Insurance in Superannuation Industry Working Group is another major project that will remain high on the agenda for the new AIST chief executive.
Garcia is worried about what would happen if group insurance within super were “thrown out with the bathwater” amid ongoing reforms to the broader life-insurance sector.
“Our entire industry needs to realise that group insurance is at risk and adopt a willingness to make significant changes quickly,” he warns. “The individuals involved in the working group all really get this and I am optimistic that can make a big difference.”
Asked what his top piece of advice was for whomever is named his permanent successor, Garcia says it is not to spread themselves too thin.
“There is so much to do, but with limited time and resources it is important to focus on the big things that will make a material difference.”
This is an excerpt from a larger interview with Tom Garcia published in the April 2017 edition of Investment Magazine, which is the official media partner of AIST and the Conference of Major Superannuation Funds.
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