Better administration and less stress is on the way for small businesses following proposed governance rules for industry superannuation funds, according to the Council of Small Business of Australia.
Assistant Treasurer Josh Frydenberg released draft legislation on Friday proposing the new rules, which will require all superannuation trustee boards to have a minimum of one third independent directors and an independent chair.
While parts of the super industry have hit back at the proposal, Council of Small Business of Australia chief executive Peter Strong told SmartCompany this morning he welcomed the federal government’s announcement.
“For too long unnecessary and costly administration has been forced onto small businesses by the inefficient and lazy industry superannuation funds – including REST, HESTA, HOSTPLUS and others,” he says.
“These funds have not given any thought to the workload and confusion they create for small workplaces.”
He says the paperwork sent by industry superannuation funds to small businesses could be “just appalling”, and could create enormous workloads and amounted to “trying to scam small businesses”.
Strong says COSBOA had been calling for better governance of super funds for about five years because of concerns that the great majority of directors were selected to be on boards based on where they worked.
He says having independent directors on boards would improve transparency and provide an opportunity for the boards to improve their approach to collecting funds and dealing with people in the supply chain.
“If industry super funds have people on boards who are independent, they will have an eye on proper governance,” he says.
“I hope these new directors will come on board and say this is the way we will collect funds.”
Small businesses ideally would be better off taken out of the collection process altogether, with superannuation payments to be included with PAYG payments to the tax office, Strong says.
“For a long time we’ve been saying… we should just send it off to the tax office,” he says.
“Until then we are confident that the introduction of independent directors and chairmen will create better administration and less stress for small business people.”
SmartCompany contacted REST, HESTA and HostPlus for comment but did not receive a response prior to publication.