The Governance Framework sets out the Trustee’s commitment to best practice corporate governance and addresses the main governance policies, principles and processes in effect, including risk management and compliance, financial reporting and the Fund’s investment model.
The Governance Framework includes oversight of the systems, people, policies, processes and skills underpinning accountability within the Trustee. As such, the Governance Framework supports us to make objective and transparent decisions which are in the best financial interests of Fund members.
The Board Charter sets out the authority, responsibilities and operation of the Trustee Board in its capacity as trustee for the Fund.
The Charter also guides and informs the Directors about their responsibilities and authorities when conducting the day to day business of the Board.
Board Appointment and Renewal
The Board Appointment and Renewal Policy sets out the detailed processes for the skills-based nomination, selection and appointment of Employer Directors, Member Directors and Independent Directors.
As a general principle, Directors are appointed for four year terms and have a maximum tenure of 12 years.
The Board Appointment and Renewal Policy also sets out the approach taken to manage Board renewal, while recognising the benefits of continuity of knowledge on the Board, our obligations under the APRA Prudential Standards, and the equal representation principles in the Superannuation Industry (Supervision) Act (the Act).
In addition, this Policy provides the framework for the regular assessment of the performance of the Board as whole, Board Committees and Directors individually.
Download a summary of procedures relating to performance of the Board (PDF).
Code of Conduct
The Trustee is proud of its reputation as an ethical and professional company that aims to achieve the highest standard in everything it does.
The Code of Conduct (Code) outlines the expected standards of conduct and behaviour of our Directors, Employees and Contractors. The Code requires that our people act with the high standard of integrity and keep confidential information they are made privy to in relation to their roles. The Code also addresses:
- the management of conflicts of interest;
- the management of gifts, benefits and hospitality;
- personal conduct;
- provisions in relation to the prevention of fraud; and
- misuse of Company property.
Compliance Policy and Framework
The Compliance Policy and Framework forms a key part of the Fund’s risk management processes.
The Policy and Framework enables the Fund to manage its compliance obligations and to develop a culture where all Employees are aware of their compliance obligations and consider these obligations when performing their roles.
Conflicts must be properly managed in order to comply with the Trustee’s fiduciary responsibilities, relevant legal obligations and appropriate standards of corporate governance and the proper management of conflicts requires the early identification of potential, actual and perceived conflicts, and the use of strategies to avoid or manage the conflict, so as to effectively eliminate or minimise the risk that a conflict might adversely affect the members and beneficiaries of the Fund, and the quality and integrity of the Trustee’s decisions and the financial services provided.
The Conflicts Management Policy documents the arrangements in place for managing situations giving rise to actual, potential and perceived conflicts of interest and conflicts of duty (conflicts) for Responsible Persons1 and employees of the Trustee. The Conflicts Management Policy sets out the Trustee’s controls and processes for:
- identifying and monitoring conflicts;
- assessing and evaluating those conflicts;
- deciding upon and implementing a response to those conflicts;
- managing those conflicts in accordance with the requirements to give priority to the duties to, and interests of, members and beneficiaries;
- maintaining a record of all identified conflicts and the action taken to avoid or manage them; and
- maintaining and disclosing the Register of Relevant Conflicts, which records all relevant interests and duties of the Trustee’s Responsible Persons.
Further, the Conflicts Management Policy is intended to ensure that where a conflict cannot be avoided:
- The duties to, and interests of, members and beneficiaries receive priority over any duties to, and interests of other persons;
- The duties to members and beneficiaries are met despite the conflict; and
- The interests of members and beneficiaries are not adversely affected by the conflict.
The Fund has a Register of Relevant Conflicts of Interests and Duties.
Fit and Proper Policy
The Fit and Proper Policy sets out:
- how the Trustee intends to comply with the relevant APRA Prudential Standard;
- processes for assessing whether a person is ‘fit and proper’ to act as a Responsible Person;
- the induction and continuous development training programs for Responsible Persons;
- the ongoing monitoring of Responsible Persons, including declarations of a conflict of interest, to ensure that the requirements of the APRA Prudential Standard are being met; and
- The steps that may be taken if a Responsible Person is required to be removed from his or her position.
People and Culture
The ethical and behavioural standards expected of employees, as well as general terms and conditions of employment are captured in a series of policies that collectively govern how we behave.
We regularly review our People and Culture policies to ensure they align with changing community expectations and to position the Fund as an employer of choice, as well as complying with all relevant legislation.
Supplier Management Framework
The Trustee’s Supplier Management Framework applies to all material business activities of the Fund, that are to be outsourced or have been outsourced. It defines the material outsourced providers and the method used to appoint and monitor the performance of these suppliers.
The Framework also ensures that the outsourcing of material functions is effectively managed and that appropriate measures are in place to protect the best financial interests and meet the reasonable expectations, of beneficiaries and to protect the financial position of the Fund. The Framework provides criteria to determine the materiality of any outsourcing arrangements and once that decision is made, the approval and appointment of material outsourced arrangements.
Policy on the management and use of Reserves
The Policy on the management and use of reserves documents the management and monitoring of the Trustee’s four Reserve accounts, the purposes for which the funds in the Reserve accounts can be used, the funding of Reserve accounts and the return of any surplus funds to members.
The Trustee operates the following Reserves:
- Operational Risk Financial Reserve - established to meet the requirements of Superannuation Prudential Standard 114 “Operational Risk Financial Requirement”, this reserve is intended to provide financial resources to address losses that may arise from operational risks. The target funding level for this reserve is 25 basis points (or 0.25%) of total member entitlements. The reserve is monitored on an on-going basis and replenished with additional funds in the event the balance falls below the tolerance limit.
- Administration Reserve - established to facilitate the finance of current and future operational requirements of the Fund, this reserve is available to meet both day-to-day operational costs as well as one-off approved expenditures considered to be in the long-term interests of members.
- Investment Reserve – the Investment Reserve reflects the net investment earnings accumulated which have not yet been allocated to members. The daily value will represent difference between the cumulative amount of net investment income (after fees and taxes) earned by the Fund and the cumulative returns provided to members via the unit price. The key component will represent the differences between the estimated tax rates utilised in the daily unit pricing and the actual investment tax experience of the Fund. This difference is trued up to the unit price on a regular basis.
- Insurance Reserve - the Insurance Reserve has two components:
- The self insurance component is used to fund the future service component of the death and disability benefits of certain defined benefit members (historical self-insurance policies).
- Premium adjustment component is used to cover additional premiums payable to the insurer due to premium adjustments agreed with the insurer.
Risk Management Framework and Strategy
This Risk Management Framework provides an overarching framework to ensure a consistent approach to the management of risk.
The Risk Management Framework deals with the following matters:
- Approach to Risk;
- Definition of Risk;
- Determination of Risk Appetite and Tolerance;
- Responsibility for Risk Management; and
- Strategies for mitigating risk.
A Risk Register is also maintained to record and assess risks.
The risk management standard AS/NZS ISO 31000 (the Standard) and APRA Prudential Standard SPS 220 – Risk Management were considered in the development of the Risk Management Framework.
A ‘Responsible Person’ of the Trustee is:
- A Director of the Trustee
- An Executive Officer of the Trustee
- The External Auditor, who is appointed to conduct an audit of the Funds
- An Actuary appointed by the Trustee to perform an actuarial function
- A Company Secretary of the Trustee
- A person who performs activities for a connected entity of the Trustee where those activities could materially affect the whole, or a substantial part, of the Trustee’s business operations, or its financial standing, either directly or indirectly
- Any other person determined by APRA, in writing, to play a significant role in the management or control of the Trustee, or whose activities may materially impact on the interests, or reasonable expectations, of beneficiaries, or the financial position of the Trustee or the Fund.