MySuper funds should adopt the trustee representation model of industry super funds because it aligns the interests of the trustee and the fund member, the Australian Institute of Superannuation Trustees (AIST) said.
"It is AIST's view that the trustee representation governance model for the not-for-profit funds should be the model adopted by all MySuper funds," the organisation said in a position paper published this month.
Under the trustee representation model, the board of a super fund is made up of an equal number of representatives from both employees and employer groups.
"This model both reflects and strengthens the 'member-first' philosophy. Clearly, under a representative system, trustees are appointed by stakeholders and this creates an alignment of interests between the trustee and the fund member," AIST said.
The Super System Review panel has recommended amending the Superannuation Industry (Supervision) Act to alter the structure of trustee boards, requiring inclusion of a minimum number of 'non-associated' trustee directors and removing the mandatory requirement for boards to maintain equal representation in selecting trustee directors.
AIST opposes this recommendation and said the representation trustee model was an important structure for generating investment returns.
"The representation trustee model of governance is a crucial factor in the not-for-profit sector's outperformance relative to for-profit funds," AIST said.
"As such, AIST is concerned that removing trustee representation requirements is a 'watering down' of the system, and if implemented, will remove key consumer protection that the representation model provides."
AIST said it would continue to discuss the matter with the government and would vigorously oppose any changes to the representation model.
