Industry Moves Hot Topics Panel - Do super fund trustees need to be qualified?
Super fund trustees are not required to have formal qualifications, though the definition of what 'qualified' actually means, can be open to interpretation. We asked our panel of experts - Sheridan Lee, Fiona Trafford-Walker, Mike Crivelli, Kate Mulligan & Bruce Hartnett - if they thought qualifications were necessary and got some diverse, entertaining and thought-provoking responses.
Shed Enterprises
Do super fund trustees need to be qualified?
Abraham Lincoln was a self-taught lawyer with only one term in Congress before being elected president in 1860. Yet general consensus ranks him as America's greatest president - surely evidence that formal qualifications have their limitations. In the same way I believe trustees don't need a university education; it's my opinion a strong dose of common sense, an inquiring mind, and high ethical standards are far more important. That said I would expect a trustee that is diligent about his or her responsibilities to take the appropriate courses and attend the relevant industry forums to fine tune their skills in order to better serve their members.
Director of Consulting, Frontier Advisors Pty Ltd
Do super fund trustees need to be qualified?
It depends on what is meant by "qualified". From an investment perspective, an understanding of how markets and asset classes work is both valuable and highly desirable as it means that the discussion and debate can immediately focus on the key issues. But it is not necessary for the average Trustee to have serious investment-related qualifications to do that. In fact, some of the best trustees on an Investment Committee are those who don't have investment backgrounds, but who have undertaken some investment training (e.g. the AIST investment courses), read the papers and think about the issues, and are prepared to ask questions. As funds become more and more sophisticated in their investment strategies, investment knowledge will become more important. Finally, superannuation funds are relatively complex organisations now and so experience at that level can also be additive.
Chair, Perennial Value
Do super fund trustees need to be qualified?
Why shouldn't they be? After all they are charged with looking after peoples' savings for retirement. Well, on reflection, why shouldn't Directors of public companies be "qualified?" Or, on more reflection, why shouldn't politicians be "qualified". For example "all prime ministers should be Rhodes Scholars, unless they are the member for Wentworth". "Qualifications" can be defined very broadly. Initially one thinks "well, should there not be some specialist/tertiary qualification for trustees?" In an ideal world, yes there should be. APRA could introduce some criteria for trustees' qualifications (let's forget about the ATO and Trustees of SMSFs for the time being, in any case, much to the chagrin of the financial sector, they seem by and large to be doing a pretty reasonable job). APRA is reasonably hands-on with major funds. In my experience anyway. The prospect of a fund collapse doesn't bear thinking about. So unless APRA gets stripped of resources (see ATO) we should be OK. If the Federal Government's current push to cut federal oversight costs continues then in the real world the need to beef up trustee skills increases. The first is happening. The second will probably need a crisis before something serious is done.
Managing Director, King Irving Consulting Group
Do super fund trustees need to be qualified?
It depends on the role they are undertaking.
A member representative may or may not have had relevant training before taking on the role - and that's fine. Their role is to represent the members, so that a requirement that they be specially trained may limit the pool of recruits.
Their role is not dissimilar from that of an independent Director; to provide an objective view to the Executive members of the Board.
Once there, it would be prudent for them to undergo technical training on superannuation, investments and the legal responsibilities as Board members.
For the Executive and Non-Executive Board members I think it is mandatory.
Not only are superannuation laws complex (as well as the duties of Directors); but the sophistication of many investments demands it.
Chair, VicSuper
Do super fund trustees need to be qualified?
Super fund Trustees do not need to be qualified as a pre-condition to joining the Board as many will bring a diverse range of experience to the Board, without necessarily having formal Tertiary qualifications. And indeed, some who do bring Tertiary qualifications to the Board may have obtained those qualifications 30 or even more years ago!
At VicSuper we have begun a process with nominating organisations to identify appropriate people to join the Board 6-12 months before the relevant Board position is available, in order that the identified appointee can attend meetings of the Board and its sub-committees as an observer, in advance of their appointment. Additionally they can then participate in relevant conferences, workshops, seminars and formal training programs so that they can build current industry knowledge and obtain qualifications that will better prepare them for the Board.
Naturally, all current Directors are also encouraged to engage in similar programs - indeed minimum hours of such training, some of which is provided in-house, are required.
In this way diverse education, experience and professional development programs - some of which we collectively experience - are brought to the Board table to enrich the decisions we make.
Editor's note:
On a slightly different topic, Bruce Hartnett raised an interesting issue when sending in his response. He wrote...
...The big challenge for Board Directors - whether of Superannuation Funds, listed companies or community organisations - is to know when their time is up. And as individuals we are not the best judges of their own case - this question is best dealt with by Boards having maximum tenure policies. In VicSuper's case it is 15 years, although other organisations with which I am involved have opted for 12 years.
Sensible succession planning, with programs like those we have adopted, make specification of educational pre-requisites unnecessary.
To join the conversation, or to suggest a topic for a future panel session, contact us at - [email protected]
