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TRUSTEE POLICIES

 
 

Conflicts Management
Proxy Voting
Remuneration Policy
Renewal

Conflicts Management Policy

Introduction
The Company (Aon Superannuation Pty Limited) is the Trustee for a limited number of public offer superannuation funds. Inevitably, there is a risk that conflicts of duty and conflicts of interest may arise. The Company has adopted this Conflicts Management Policy (the Policy), which outlines how to identify, manage, avoid and/or disclose internal, personal and related party conflicts. This Policy is also intended to meet the requirements of SPS- 521 (Conflicts of Interest).

This Policy forms an integral part of the Company's Board Governance Program. Conflicts have also been identified as a material risk under the Company's Risk Management Framework and the implementation of this policy is a key risk control.

The use of the word 'conflict' in this Policy refers to a conflict of interest and/or a conflict of duty.

Principle
The fundamental rationale for the Policy is to maintain the integrity of the operations of the Company, by being fair, honest, transparent and professional in the conduct of Company proceedings through identifying, managing, avoiding and/or disclosing conflicts of interest or duty.

Registrable Superannuation Entity (RSE) Licensee

Definitions

  • What is a relevant interest?
    For the purposes of this Policy and the Company’s Conflicts Management Procedures (the Procedures), a relevant interest of the Company, an associate of the Company or a Responsible Person of the Company, is defined as any interest, gift, emolument or benefit, whether pecuniary or non-pecuniary, directly or indirectly held by the Company, an associate of the Company or a Responsible Person of the Company, that the Company has determined to be relevant as defined in this Policy.
  • What is a relevant duty?
    For the purposes of this Policy and the Procedures, a relevant duty refers to any duty that the Company or a Responsible Person of the Company owes to beneficiaries or to any other person the Company has determined to be relevant as defined in this Policy
  • What is a conflict?
    A conflict in relation to the Company as an RSE Licensee is as defined in the Prudential Standard SPS - 521, namely:
    • between the duties owed by the Company (or a responsible person of the Company) to beneficiaries and the duties owed by them to any other person;
    • between the interests of beneficiaries and the duties owed by the Company (or a responsible person of the Company) to any other person;
    • between an interest of the Company (or an associate, responsible person or employee of the Company) and their duties to beneficiaries; and
    • between an interest of the Company (or an associate, responsible person or employee of the Company) and the interests of beneficiaries
  • Responsible Person
    For the purposes of this Policy and the Procedures, a Responsible Person is defined in accordance with Prudential Standard SPS 520 ‘Fit and Proper’ and the Company’s Fit and Proper Policy
  • Relevance
    For the purposes of this Policy and the Procedures, the Board will discuss any matters exceeding the thresholds below:
    • For an interest, emolument or benefit - any shareholding or benefit in an entity (including an interest in a superannuation fund) which equates to a 5% interest or more of the whole shareholding or interest in such entity or $100,000 whichever is lower;
    • For a gift - all gifts received by the Responsible Person due to their position as it relates to the Company.
    The Board will decide the relevance of the disclosed matters considering their potential to have a significant impact on the capacity of the Company, a Responsible Person or an associate of the Company holding the relevant interest to act in a manner that is inconsistent with the best interests of beneficiaries. The following disclosed matters are always considered material;
    • Any interest, emolument or benefit over 5% market value in a related party to the Company and its service providers;
    • Any gifts received over the value of AUD $1,000 (being the value prescribed in Aon’s Global Gift Policy).
    The Fund Secretary will record in the Register of Interests retained for this purpose all relevant interests

 

Australian Financial Services (AFS) Licensee

In addition to the conflict situations defined above, from the perspective of the Company as an AFS Licensee, a conflict may arise where:

  • Some or all of the interests of a Director are inconsistent with the interests of other Directors;
  • Some or all of the interests of a Director are inconsistent with the interests of the Company;
  • Some or all of the interests of the Company are inconsistent with the interests of another company (Related Party) for which a Director of the Company is also an employee or director; and
  • Some or all of the interests of one or more Directors of the Company are inconsistent with the interests of members of a superannuation fund for which the Company acts as trustee.

Managing Conflicts

The Company has mechanisms and procedures in place to manage conflicts relevant to its role as both an RSE Licensee and an AFS Licensee, namely:

  • identification
  • management
  • avoidance
  • disclosure

Monitoring these conflicts arrangements is a priority of the Company which has effective structures in place to support this monitoring, including:

  • Director Questionnaire designed to elicit information which may help identify  inconsistencies between the interests of office holders/directors and companies for which they owe employment/director duties and thereby identify possible Conflicts of Interest (Disclosure of Personal Conflicts of Interests);
  • Director’s Consent and Director and Responsible Person Declaration of Duties and Interests Forms to be completed before appointment as a Director / determination as to a Responsible Person of the Company is made;
  • Agenda item discussion of Conflicts at all trustee meetings;
  • Board discussion of conflicts disclosed in the minutes of the meetings;
  • The process of appointments to the Board requires tabling and discussion at a Board Meeting of the proposed appointee’s curriculum vitae;
  • A recognition that Trust duties are paramount;
  • Structural arrangements for the Company Board;
  • Responsible Person and trustee training;
  • Other Aon Policies and Codes of Conduct including Aon’s Code of Business Conduct, Aon’s Code of Ethics and Aon’s Gift Policy;
  • Quarterly certifications from outsourced material service providers including a conflicts declaration; and
  • Annual Responsible Person verification form.

For further details on managing conflicts, see the Company Conflicts Management Procedures.

Trust Duties Paramount

The Company and each Director recognise that a Director must act as a Director for the benefit of the Company and not for his or her own benefit.

It is also recognised that the Company and each Director owes a paramount fiduciary duty to beneficiaries: to act in the best interests of the beneficiary and not his or her own. This paramount fiduciary duty overrides any duty that a Director owes to a Related Party for whom the individual also acts as an employee, director, consultant etc. and any interests that a Director or Responsible Person has in such a Related Party or an Outsourced Service Provider.

The Company's fiduciary duty requires Directors not to use their position, or the Company's position, for the purposes of acquiring a benefit or advantage for that Director, or the Company over beneficiary members (i.e. funds over which the Company holds trusteeship).

The Company is subject to the enhanced Company obligations contained in Section 52(2)(d) of the Superannuation Industry (Supervision) Act 1993.

Directors recognise that in the event of a conflict between the interest of the Company and/or any member of any fund for which the Company is acting as a trustee (party 1) and any other party (including the Director(s)) (party 2) the Directors must prefer the interest of party 1

Disclosure

The Company discloses on a publicly accessible area of its website this Conflicts Management Policy, the Register of Duties and Interests.

Related policies

As indicated above, all Directors of the Company who are employees of any other Aon entity adhere to the Aon's Code of Ethics and the Aon Code of Business Conduct, which outline how to manage apparent or potential conflicts that occur when personal interests or activities could lead others to doubt or query an Aon employee's objectivity or impartiality. Directors who are not employees of another Aon entity also follow those policies which are appended to the Board Governance Program. All Directors (whether Executive or Non-Executive) are required to abide by these policies

Proxy Voting

The Funds managed by Aon Superannuation Pty Limited do not hold direct shares and has delegated portfolio management, including proxy voting, to external fund managers.

The Funds predominantly use Vanguard Investments Australia and Russell Investment Management for the management of share portfolios.

The proxy voting policies of these managers are located at the links below.
https://www.vanguardinvestments.com.au/institutional/inst/proxy-report.jsp
https://russellinvestments.com/-/media/files/au/resources/proxy-voting-principles.pdf

Remuneration Policy

Director and Executive Officer Remuneration

Aon Superannuation Pty Ltd ('Trustee') has implemented a Remuneration Policy which operates under the broader Aon Group Remuneration framework which is overseen by the Independent Aon Organisation and Compensation Committee. As the Trustee Company does not employ staff, its policy applies only to its Directors with all Aon employees covered by the Group policy.

Remuneration objectives

The Trustee's Remuneration policy has been designed to align with Aon plc's Global Remuneration Policy and the Trustee's strategic business plan to encourage behaviour by the named individuals:

  • in line with the Aon values, Aon Code of Conduct and Aon Leadership Model;
  • to protect the interests and meet the reasonable expectations of members and other beneficiaries;
  • to promote the long-term sustainability and viability of the Trustee and the Funds in accordance with its Strategic Business Plan;
  • to act in accordance with the Trustee's Risk Appetite Statement outlined in the Risk Management Framework.

Director and Executive Officer Remuneration Disclosure in accordance with section 29QB of the Superannuation Industry (Supervision) Act 1993

It is the practice of the Trustee to pay a fixed remuneration with no performance based components for directors duties although it is recognised that employed individuals may have a performance related component linked to their performance in respect of their duties to their employer. The directors do not receive any long-term employee benefits in respect of their duties as directors of the Trustee. The Trustee does not pay any termination fees to terminated directors.

The following table sets out the remuneration paid to the directors of the Trustee during the calendar years ended 31 December 2015 and 2016.

    Year ended 31 Dec 2015 Year ended 31 Dec 2016
Director Role Short-term employee benefits* Post-employment employee benefits† Short-term employee benefits* Post-employment employee benefits†
Paul Mazoudier Chairman of the Board, Independent Director $73,394 $6,697 $73,394 $6,697
Helen Conway (2015 pro-rata) Deputy Chairman of the Board, Independent Director $13,730 $1,270 $54,795 $5,205
Trevor Allen (resigned 31/8/16, pro rata) Chairman of Audit Committee, Independent Director $54,920 $5,080 $36,530 $3,470
Giselle Collins (commenced 1/7/16, pro rata) Chairman of Audit Committee, Independent Director - - $22,831 $2,169
Frank Argent Chairman of Compliance and Risk Committee, External Director $60,000 $5,475 $60,000 $5,475
Mike Murphy (retired from Aon Hewitt and commenced as and External Director from 2/4/15), pro rata Chairman of Investment Committee, Non-Executive Director $41,190 $3,810 $54,795 $5,205


*The short-term employee benefits paid to directors consists only of director fees.

†The post-employment employee benefits paid to directors consists only of superannuation benefits, being 9.5% payable for 1 January 2015 to 31 December 2016.

 

An additional payment of $10,000 will be paid to the final quarter 2016 Non-Executive Directors in compensation for the additional work associated with the revised strategy and associated new business resulting in additional meetings, out of meeting consultations as well as commercial and legal document reviews during this time.  As the revised strategy has affected the ongoing workload, and following an independent remuneration review, the Board approved an increase in the Non-Executive Director fees, inclusive of all committee chairman responsibilities and membership, to $80,004 per Director and $120,000 for the Chairman

The ongoing Aon employed directors listed below are not paid any remuneration directly for their services as directors of the Trustee Board. However, they are paid remuneration from Aon Hewitt as employees where their duties as Directors only form part of their overall job responsibilities. For the 2016 calendar year, the value of the services provided by the Aon Employed Directors as part of their job role was set at $40,000 which was factored into the fees paid to Aon Hewitt under the existing outsourcing agreements.

The Aon employed directors for the 2015 and 2016 calendar years are:

    Remuneration component
Director Role 2015 2016
Jennifer Dean Aon employed Director $40,000 $40,000
Janice Sengupta Aon employed Director $40,000 $40,000
Mike Murphy (NED from 2/4/15) Aon employed Director $10,000 0
Steven Clarke Aon employed Director $40,000 $40,000

 

The total value of the services provided by these directors for the 2016 year paid by the Trustee to Aon Hewitt was $120,000 plus GST. In 2015, Mike Murphy retired as an Aon employed Director, however continued as a non-employed director, on a new contract.

Subsequent changes to the Board include:

  • Paul Mazoudier and Helen Conway left  the Board
  • Giselle Collins was appointed the Chairman of the Board
  • Jim Humphrey joined the Board and was appointed Chairman of the Audit Sub-Committee

Renewal Policy

This Renewal Policy is drafted to fulfil the requirements of:

  • SPS 510 Governance; and
  • the Memorandum and Articles of Association of the Company (the Articles).

This Policy:

  • Recognises the importance of the Board remaining open to new ideas and independent thinking, while retaining adequate expertise and experience:
  • Recognises the role of Aon Hewitt in appointing, re-appointing, and removing Directors, and
  • Outlines the requirement for the Board to consider whether a Director is still making a significant contribution to the Board prior to each re-appointment.

The Renewal Policy is provided to:

  • Aon Hewitt to consider the requirements of the Policy when nominating (and re-nominating)  Directors;
  • Potential candidates for Director as part of the recruitment process; and
  • All appointees as soon as possible after their appointment as a Director.

The Board Renewal Policy is applied in conjunction with the Fit and Proper Policy.

Tenure

The Company has set a maximum term of 10 years whilst not employed by Aon for tenure of a Director. Additionally, consideration is given to each director’s role on an annual basis in accordance with the Fit and Proper Policy, as well as the role that natural attrition plays, via internal moves and job changes for the Aon employed directors.

However, the Board retains the right to extend this tenure following a detailed review.  The primary reasons for extension would be to retain the skill set and specific expertise that that Director was able to offer, including knowledge of “the market”, Aon and its products, as well as the operations and knowledge of the Company’s Board or in the event of turnover of other Directors to provide stability.

In accordance with the Articles, the sole shareholder, Aon Hewitt has the right to annually elect the Directors to the Board. In practice, all incumbent Directors will be considered renominated unless they otherwise inform the Office of the Trustee or the maximum term has been reached. They will be elected as follows

  • Aon-employed Directors – Aon Hewitt will consider the incumbents and other potential nominees and nominate these Directors in writing for the Aon-employed positions subject to successful completion of the Fit and Proper assessment;
  • Non- Aon-employed – the Board collectively will consider the incumbents and unless any issues arise from the Fit and Proper assessment will ratify the Directors’ continuing appointment to the Board.

A Director who changes the nature of their employment and directorships that were held on appointment to the Board must promptly notify the Chairman of the changes. This does not require the Director to resign their position on the Board, however the appropriateness of the particular Director’s membership on the Board will be considered in the context of the Conflict Management Policy.

In the case of Aon-employed Directors, it is expected that they will resign from their duties when they leave their employment at Aon unless specifically requested by the Board in conjunction with
Aon Hewitt to remain.

Selection of Directors

The Board recommends and promotes that individuals able to meet the criteria of the Fit and Proper Policy are to be nominated for the position of Director.

When the Board decides to appoint a replacement or additional Director it will use the skills matrix to identify which particular skills and competencies are most desired in a new appointment.

Aon-employed Directors     

Before the Board appoints any new Aon-employed Director it will provide Aon Hewitt with a copy of the skills matrix and highlight any perceived weaknesses in the overall skills of the existing Board so that any appointee can improve the overall capability of the Board.

The Board will also note any new Aon-employed Director’s ability to separate their responsibilities as Aon executives from their duties to the Company and the Board.

Non-Aon-employed Directors

In the majority of circumstances, non-Aon-employed Directors would be expected to meet the criteria of independence in addition to the requirements outlined in the Fit and Proper Policy. An Aon-employed Director may be reappointed as a non-Aon-employed Director on the request of the Board subject to a minimum of two (2) independent Directors being on the Board.

Succession Plan

The Board currently consists of seven (7) directors which exceeds the current APRA requirement for a minimum of four. The Board relies on the ability of Aon Hewitt to recognise appropriate internal successors by identifying employees of Aon Australia who have the necessary skills and expertise to fill any Aon Employed Director’s position as it arises.

It is the intention of the Board to maintain at least two independent Directors and for the Chairman to be an independent Director. Accordingly,  if the Chairman were to leave the Board, the other independent Director could step in as acting Chairman whilst a replacement was found and possibly be appointed as Chairman going forward.

In the event that the Chairman should be unavailable (including if he or she should die or become unexpectedly disabled) the Board shall appoint either an interim successor or permanent successor as may be required in the circumstances.

Director Removal

A Director will be removed from the office of Director if that Director:

  • fails to meet the obligations and responsibilities of a director as outlined in the Board Governance Program including the training requirements;
  • fails to pass the annual Fit and Proper Assessment; or
  • meets any of the criteria set out in Section 108 of the Articles.

About Aon Hewitt

Aon Hewitt is the global talent, retirement and health solutions business of Aon plc (NYSE: AON). Aon Hewitt empowers organisations and individuals to secure a better future through innovative talent, retirement and health solutions. We advise, design and execute a wide range of solutions that enable clients to cultivate talent to drive organisational and personal performance and growth, navigate retirement risk while providing new levels of financial security, and redefine health solutions for greater choice, affordability and wellness. Aon Hewitt is the global leader in human resource solutions, with over 30,000 professionals in 90 countries serving more than 20,000 clients worldwide. For more information on Aon Hewitt, please visit www.aonhewitt.com.au