The Australian Institute of Superannuation Trustees is urging the Senate to reject the Turnbull Government's proposal to mandate a governance model for superannuation funds and preserve the equal representation rule.
In response to the Superannuation Laws Amendment (Strengthening Trustee Arrangements) Bill 2017 sitting before a Senate economics committee, AIST said there is no evidence that the current system is failing members or that the proposed model would improve member outcomes.
AIST chief executive Eva Scheerlinck said the profit-to-member governance model - in combination with general trust law, statutory law, APRA prudential standards and the AIST Governance Code - already provides a robust independent framework that both protects members' interests and consistently delivers outperformance.
"Union and employer-appointed trustee directors of profit-to-member super funds are all independent from management and - unlike the directors of bank-owned super funds - they are free to act solely in members' best interests as they are not required to produce a profit for parent shareholders," she said.
The Bill proposes one-third of super fund directors to be independent as well as appointing an independent chair.
The Turnbull Government is aiming to improve corporate governance in superannuation by aligning it more closely with the way ASX-listed companies are governed.
It also seeks to abolish the equal representation rule, whereby super trustee boards are either required or can elect to comprise solely of employer and member representatives with no independent directors - a rule which has not changed significantly since the introduction of super in 1992, according to the Bill's explanatory memorandum.
Scheerlinck said: "The removal of the equal representation model from the legislation will remove the guaranteed voice of the members and of the employers, which currently ensures a balance in decision-making and a true understanding of the membership."
She added while there was no evidence that equal representation precluded a board from being adequately skilled, AIST supported profit-to-member funds having the flexibility to appoint up to one-third independent directors to fill whole-of-board skill gaps where they existed.
In recognising the value of ongoing improvement in the profit-to-member governance framework, AIST launched a governance code mandatory for member funds from 1 July 2018.
Separately, SMSF Association chief John Maroney recently told a Senate Committee employees have the fundamental right to choose their own super fund - SMSF members are not the only ones affected by lack of choice.
"All employees should have the right to enter the fund of their choice, including an SMSF, when starting new employment, and not be forced into a fund because of an enterprise agreement or industry award," he said.
In response to the Treasury Laws Amendment (Improving Accountability and Members Outcomes in Superannuation Measures No. 2) Bill 2017, Maroney said choice of fund would increase the efficiency of the system and remove the constraints of enterprise agreements.
It is "unfair and inefficient" that enterprise agreements can dictate where super guarantee contributions go and needs to change, he added.