Phase One - Governance

While SMSFs are seen as part of the structure of the Super System and to be considered as part of Phase Three, the following issues have been proposed by the Review as suitable issues in respect submissions can be made.  These issues may also affect SMSFs.

These issues include the following:

• Has the Global Financial Crisis highlighted governance problems in the super system?  For example, the valuation of unlisted investments (eg infrastructure investments, private equity investments) where valuation by a market is not possible.
• Should Super still be provided using trust structures?  Could super be provided as contracts (eg life policies) or simply provided by a centralised government administered fund?
• Should funds be required to adopt “ethical” investment principles or simply invest amorally? 
• Should trustee duties in relation to super be completely set out in legislation?  Should trustees be able to disregard provisions in trust deeds which are intended or have the effect of requiring outsourcing arrangements to related parties?
• Should super funds, because of the tax concessions provided to super by the Government, be required to invest in a manner consistent with government policy objectives such as sustainability, social responsibility, and climate change?
• Should the portability of benefits be restricted if this would encourage super funds to undertake long term investments?
• Should members be able to direct or influence trustees in their exercise of voting rights of their investments?  Should trustees – irrespective of any member direction – be required to actively consider the exercise of voting rights attached to their investments?
• Is the tilt towards equities in super funds a good thing or a bad thing?  Should restrictions be imposed on investment allocation?
• Should there be rules against gearing for investment purposes?
• Should there be rules against investments which potentially expose the fund to loss in excess of the capital investment (eg derivatives which do not involve direct gearing such as contracts for differences)?