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

25 Pages Posted: 1 Aug 2012

See all articles by Monica Tan

Monica Tan

RMIT University; Financial Research Network (FIRN)

Marie-Anne Cam

RMIT University; Financial Research Network (FIRN)

Date Written: August 1, 2012

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.

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

JEL Classification: G23, G34, G38

Suggested Citation

Tan, Monica and Cam, Marie-Anne, Does Governance Structure Influence Pension Fund Fees and Costs? An Examination of Australian Not-for-Profit Superannuation Funds (August 1, 2012). Available at SSRN: https://ssrn.com/abstract=2121132 or http://dx.doi.org/10.2139/ssrn.2121132

Monica Tan (Contact Author)

RMIT University ( email )

35 Herlihys Rd
Templestowe Lower, 3107
Australia
403388233 (Phone)

Financial Research Network (FIRN)

C/- University of Queensland Business School
St Lucia, 4071 Brisbane
Queensland
Australia

HOME PAGE: http://www.firn.org.au

Marie-Anne Cam

RMIT University ( email )

Business
Level 12, 239 Bourke Street
Melbourne, Victoria 3000
Australia
+61 399255503 (Phone)
+61 399255986 (Fax)

HOME PAGE: http://rmit.com.au/browse/About%20RMIT%2FContact%2FAll%20contacts%2FStaff%2Fby%20name%2FC%2F;ID=ldfn

Financial Research Network (FIRN)

C/- University of Queensland Business School
St Lucia, 4071 Brisbane
Queensland
Australia

HOME PAGE: http://www.firn.org.au

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