Cbus Independent Review recognises Fund’s member focus, provides roadmap to strengthen operations
11 May 2015
Professor Graeme Samuel AC and Mr Robert Van Woerkom’s Independent Privacy Governance Review of Cbus has been finalised and has made a number of recommendations to strengthen the operation of the fund.
The review recognises the Fund’s important role in ensuring the payment of members’ superannuation entitlements and the difficulty created by a minority of employers in the construction industry who avoid their obligations.
The review finds that the Fund needs to modernise its arrears practices to allow for greater predictive and pro-active management of employers not paying their employees’ superannuation whilst maintaining the privacy of personal information.
The review’s authors recognise the focus of the Fund’s Board and Executive on the best interests of members, its cohesive functionality and demonstrated sense of purpose in tackling issues uncovered and commented upon by the Royal Commission.
The review notes that the actions referred to by the Royal Commission appear to be isolated actions of two employees of Cbus which were not sanctioned by the Board or the CEO, were not of any advantage to Cbus and are regarded as unacceptable by directors and senior executives.
David Atkin, Cbus CEO said that work has commenced to develop an implementation plan that will position the Fund to meet members and employers future needs.
"The review has provided an opportunity to look at how we do our work and the best structure for Cbus into the future," said Mr Atkin
"It has highlighted the major challenge we face in ensuring members receive payment of their superannuation entitlements whilst balancing privacy requirements around personal information.
"Last year we recovered $110 million for members but there is still considerable scope for us to do more.
"The review notes the size of the task has meant practices that developed over time now require further improvement through boosting the Fund’s internal capacity and oversight of the arrears management function.
"We will continue to work closely with our sponsoring organisations, both unions and employers, who have a legitimate role in ensuring compliance with the payment of superannuation across the industry.
"But we will build our internal capability, modernise our arrears program to allow for pro-active identification of employers not doing the right thing, strengthen oversight and management of the processes in-house.
"That said, there is more that must be done to get the balance right in both policy and practice and the review notes this.
"More broadly Cbus is undertaking a business transformation process which will address the areas for improvement identified in the report. This includes reviewing and realigning roles across the Fund.
"We will be looking at the very important roles in the Workplace Distribution Unit and bringing in greater diversity and skills," said Mr Atkin.
Fund Chair, The Hon. Steve Bracks AC, noted the independent findings of the review of the Board’s cohesiveness and focus on delivering outcomes to members.
"It should be acknowledged that Cbus has grown to be the sixth largest industry super fund providing a net return average of 9.26% p.a. over its 30 years of existence for its members under a representative governance structure.*
"It should also be noted in the context of the issues being examined that no fund member has suffered any financial loss.
"The review has examined overall governance structures at Cbus with the reviewers observing that the Board could benefit from a further injection of independent directors.
"The Board has established a sub-committee to explore the recommendation and, should it be identified that expertise could be strengthened or it would be advantageous for the future operations of the Fund, they will consider the appointment of more Directors who have no association with sponsoring organisations.
"We thank Professor Samuel and Mr Van Woerkom for their robust review and the valuable assistance they have proffered to the Fund," Mr Bracks said.
About the Independent Privacy Governance Review
The Cbus Board commissioned Professor Graeme Samuel AC and Mr Robert Van Woerkom to conduct a review of the issues raised in the Trade Union Royal Commission (TURC) concerning a breach by Cbus staff of privacy provisions.
Professor Samuels and Mr Van Woerkom were provided with full access to all documents, Cbus staff and Directors in order to fully understand why this incident occurred.
The review was informed by the findings of the KPMG Forensic Report.
The Cbus Board asked them to provide a report and recommendations on privacy governance and other associated issues.
See the full terms of reference for the review.
Key findings of the review
- The release of personal details that was subject to hearings of the Royal Commission appears to have been an isolated action by two employees. These actions were not sanctioned by the Board or the CEO.
- The construction industry faces a serious problem with a minority (but not insignificant) number of employers regularly 'gaming the system' and not meeting their Superannuation payment obligations. This problem is exacerbated by the lack of enforcement action by the Australian Taxation Office.
- Sponsoring organisations such as unions have a legitimate role in the process of pursuing arrears, but Cbus should and is strengthening its internal capacity to pursue arrears on behalf of members.
- The Board and CEO have demonstrated a determination to bring about change to strengthen its Privacy Management Framework..
- The expertise and diversity amongst the Workplace Distribution Unit should be increased to enhance the valuable role they play for the Fund in managing the relationship between Cbus and its members.
- It may be advantageous to the future of the Fund to reflect the independence of the Chair in the constitution and to consider where expertise might be strengthened by the appointment of directors who have no association with the sponsoring organisations.
*The return is based on the crediting rate, which is the Return minus investment costs and taxes, the Trustee Operating Costs and reserves. Excludes administration fees. To 30/6/14.
*Past performance is not a reliable indicator of future performance