The task of chairing the board of trustees of a modern, progressive superannuation fund becomes more complex by the year. As inflows and mergers lead to the concentration of assets in the hands of fewer, larger funds, they’re becoming increasingly powerful and influential entities and attracting greater political attention and envy.
At the same time, increasing pressure on funds to deliver better retirement income solutions and to lift their game on member experience means that in addition to the increased scale of fund operations, there’s a wider scope of business operations that needs to be managed.
Michael Swinsburg, managing partner of executive recruiter Alexander Hughes, says “complexity” is one of the four Cs (along with culture, competition, and clarity of purpose) that super fund chairs must be more adept at managing today than 10 or even five years ago. He says there’s also a clear and growing political dimension to the role: the chair of a super fund must be adept at negotiating the political process, and show “a willingness to enter that bearpit”.
And it’s no longer the case that super funds – industry funds, in particular – can count on “air cover from one side of politics”, Swinsburg says.
“That air cover doesn’t exist anymore, if I can use that term,” he says.
“Look at [financial services minister] Stephen Jones hammering on CX, on customer service. Who would have thought that side of politics would be so harsh on those industry funds?”
The modern-day chair must “be apolitical, and be seen to be apolitical”, Swinsburg says. That doesn’t mean there isn’t still a healthy number of politically connected individuals occupying the position.
Swinsburg says chairs also must be equipped to operate on a global stage, as funds’ operations expand offshore and as they become more significant players in markets and economies outside Australia.
“They will need to be miracle workers to find all the skills they need on their boards,” Swinsburg says.
The plain fact of the matter is that not every trustee elected to the board of a super fund, large or small, is equally well-equipped to engage with the scale and complexity of the job at hand. A chair often needs to be able to work with a diverse range of skill sets around the board table to get the best performance from the assembled trustees and to deliver the best possible governance of the entity they lead.
And they appear to be performing well on a global comparison. The 2023 Global Pension Transparency Benchmark, published by Investment Magazine sister publication Top1000funds.com in conjunction with CEM Benchmarking, found Australia ranked as the second-best pension fund market in the world for fund governance, behind only Canada and head of Sweden, Denmark and the UK.
The benchmark assesses the five largest funds in each of 15 countries on four factors, including governance. It uses four criteria to assess governance – including board competencies and qualifications, and compensation – to produce a benchmark result out of 100. The Australian funds assessed (ART, Australian Super, Aware, Future Fund and Unisuper) collectively achieved a benchmark score of 93. Canadian funds scored 98.
Source: APRA data
Notes:
(#) Total rem derived from published remuneration reports including super, long service and leave accrual. Excluding non-monetary benefits
* In role for less than one year
** Only band range provided. Assumed the mid point
## As at FY Dec 2022
### Rem estimated based on previous CIO 2021 reported compensation
^ Rem is for role in OnePath Custodian only
^^ Rem is for role in Nulis Nominees only
%% Based on NSW Public Service Commission remuneration framework
(~) As at June 2022
The remuneration structures of superannuation boards and chairs reflect the realities of the expanding and ever more complex world they operate in. APRA data for funds included in Investment Magazine’s analysis shows the top-paid superannuation chair in Australia, Colonial First State Super’s Greg Cooper, received a total remuneration of more than $423,000 in the year to June 30, 2023. CFS manages just over $100 billion in superannuation assets, but the scope of its operations is broader than that, incorporating wholesale and retail funds management, and financial adviser-facing technology platforms.
That explains in part a gap between Cooper’s remuneration and that of the chair of the country’s largest super fund, the $311 billion Australian Super, Don Russell. The former ambassador to the United States was paid just over $323,000 for his role with that fund, ahead of the $291,250 received by HUB24 chair Bruce Higgins. APRA data shows HUB24 administers $25 billion of superannuation assets, but similarly to CFS, its overall scope is broader than just super and it’s one of the fastest-growing investment administration platforms in the country, enjoying flows from advisers and self-managed super funds.
APRA data shows the highest-paid board of trustees among the funds included in the Investment Magazine analysis was the 12-member board of Australian Super, which collectively received more than $2 million at an average of $174,000 each, ahead of the 14-person Cbus board, which collectively received about $1.9 million at an average of $133,000 each (Cbus chair and former federal treasurer Wayne Swan received $220,000).
All up, around 150 individuals at 15 funds received average remuneration of $100,000 or more, while each trustee of a fund included in the Investment Magazine analysis received, on average, $89,796, although this includes instances of remuneration split between multiple individuals where the chair changed during the period under review.
