Industry fund board members understand the needs of ordinary wage earners. That is even more important with funds whose members do not generally take an interest in their super.

Some large industry funds cover workers from a broad range of industries. However, there is still a commonality of interests there; usually because the members will tend to have low to middle incomes.

These directors, by definition, know a lot about the particular industry – whether retail, hospitality or health and community sectors – in which the majority of members work. These large industry funds are open to anyone, but they remain largely focused on particular industries.

The government wants there to be at least one-third of the board of all superannuation funds to be "independent" directors.

Under the bill before Parliament the definition of independence is very narrow. It will mean that industry fund boards will be recruiting expensive independent directors with "for profit" experience. The proposed governance measure of at least one-third independent directors is actually lower than retail funds have now.

The Financial Services Council, whose membership includes those financial institutions, such as banks, require their super funds to have a majority of "independent" directors. Most of the big banks have shown very poor governance. They have been plagued by scandals in their financial planning arms. That is the very model the government wants to foist upon not-for-profit funds.

Over time, the governance rules would probably mean most industry funds will have a majority of retail fund type "independent" directors on their boards. That is because the bill forces funds to make a public disclosure of "if not, why not" as to why the majority of the board is not independent.

The group representing industry funds, Industry Super Australia, estimates the changes would cost up to $168 million during the first five years. Not-for-profit funds would incur more than 90 per cent of the total costs. The 5 million industry fund members will be picking up the tab, through higher costs for a governance regime that will likely result in poorer returns.

Industry super funds are intentionally different to bank-owned funds. They have boards that are more focused on members rather than preoccupied with triggering their bonuses. Industry funds, for example, have never paid commissions to financial planners.