Does Governance Structure Influence Pension Fund Fees and Costs? An Examination of Australian Not-for-Profit Superannuation Funds

Abstract:     
The importance of managed fund governance structures has become apparent in recent years. Looking at the trustee boards and committee structures of Australian not-for-profit pension funds, we find correlations between funds’ internal governance structures and their level of fees and costs. Our study suggests that larger boards are linked to higher investment management fees and expenses, operating expenses and trustee fees. In addition, we find a positive relationship between the proportion of independent trustees and investment management fees and expenses, and operating expenses. These fund costs increase as the number of board committees rises. Finally, we observe that the presence of board committees and size of the fund affects different types of fund costs. Overall, these findings suggest that the conventional good governance practices derived from corporate sector literature do not benefit superannuation fund members in terms of cost reduction.

Number of Pages in PDF File: 25

Keywords: pension funds, superannuation funds, fund governance, trustee, fund fees, fund costs

JEL Classification: G23, G34, G38

working papers series