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Governance in the Australian Superannuation Industry

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Abstract

In the superannuation/pension industry, ordinary investors entrust their retirement savings to the trustees of the superannuation plan. Investors rely on the trustees to ensure that ethical business and risk management practices are implemented to protect their retirement savings. Governance practices ensure the monitoring of ethical risk management (Drennan, L. T.: 2004, Journal of Business Ethics 52, 257–266). The Australian superannuation industry presents a unique scenario. Legislation requires employers to contribute a minimum of 9% of the employees wage to retirement savings. However, there are no legislated governance standards, although there are standards of recommended governance practices. In this article, we examine the level of voluntary adoption of governance practices by the trustees of Australian public sector and industry superannuation funds. We also assess whether superannuation governance practices are associated with performance and volatility/riskiness of returns. Survey results show that the majority of superannuation plans adopt recommended governance practices supporting the concept of ethical management of the member’s retirement savings. The examination of governance principles that impact returns and risk shows that board size and regular review of conflicts are positively associated with return. Superannuation plans with higher volatility in returns meet more frequently.

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Abbreviations

APRA:

Australian Prudential Reg- ulation Authority

ASFA:

Association of Superannuation Funds of Australia

ACSI:

Australian Council of Super Investors

AIST:

Australian Institute of Superannuation Trustees

ASX:

Australian Securities Exchange

ICAA:

The Institute of Chartered Accountants Australia

CEOs:

Chief Executive Officers

CIOs:

Chief Investment Officers

PDS:

Product Disclosure Statement

CRIF:

Centre for Research in Finance

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Author information

Authors and Affiliations

  1. University of Queensland, Brisbane, QLD, Australia

    Karen L. Benson

  2. Queensland University of Technology, Brisbane, QLD, Australia

    Marion Hutchinson

  3. PricewaterhouseCoopers, Kuala Lumpur, Malaysia

    Ashwin Sriram

Authors
  1. Karen L. Benson
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  2. Marion Hutchinson
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  3. Ashwin Sriram
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Correspondence to Karen L. Benson.

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Benson, K.L., Hutchinson, M. & Sriram, A. Governance in the Australian Superannuation Industry. J Bus Ethics 99, 183–200 (2011). https://doi.org/10.1007/s10551-010-0648-1

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  • DOI: https://doi.org/10.1007/s10551-010-0648-1

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