Researcher SuperRatings has consistently found that non-profit super funds dominate the medium- and long-term performance charts. There are several reasons for this, including that they charge lower fund management and administration fees and don't pay commissions.

In a recent study, the Australian Prudential Regulation Authority observed a similar trend and noted that retail funds tend to earn lower risk-adjusted returns on average than other types of funds. The study took into account 10 years of returns.

Now the authority has identified a further factor - a significant difference in the way trustees for non-profits and retail funds operate.

This further survey of 187 super funds, each with assets of more than $200 million under management, and 1319 trustee directors, has thrown up some intriguing differences. These include differences in the way trustee directors get their board positions, the amounts they are paid and the commitment of their own super in the funds. There is also evidence of greater related party involvement with service providers by retail funds.

The authority found, broadly speaking, that retail trustee boards seem to act more like the boards of shareholder-owned corporations, whereas trustees of corporate, public sector and industry funds act more like traditional mutual trustees. Retail trustees rely more on fund executives taking the initiative on most key decisions but trustees of non-profits mostly make decisions based on their own input and that of consultants.

Interestingly, more than half of all retail fund trustee directors are employed by related parties or by the fund itself and very few are nominated by fund members.

By contrast, many industry, corporate and public sector trustee directors are member nominated.

"This is an inevitable difference flowing from the structure and the equal representation provisions associated with directors in not for profit funds," the authority's report notes.

As a group, retail trustee directors are also paid considerably more for their services than trustee directors in the other sectors.

And more than half of non-profit trustee directors are themselves members of their funds. This indicates that their interests may be more aligned with those of members than directors who have no investments in the fund on whose board they serve.

One in five retail trustee directors is a member of the fund.

The authority found 90 per cent of all funds have formal policies to manage potential conflicts of interest, including the use of disciplinary action. However, only 41 per cent of funds have formal policies that forbid the use of "soft-dollar" arrangements, where indirect payments are made to service providers without being recorded as standard fees or commissions.

About 14 per cent of the service providers have entity relationships with their funds, the most likely being a common parent company. Fees paid to service providers are often netted off in investment returns without being formally disclosed.

Where directors have a relationship with service providers, they are well paid by that provider, earning an average of $175,000 a year.

Directors of retail funds are the best paid for trustee work, with 20 per cent earning more than $100,000 and the average pay being $70,000, double that of directors in other sectors.

Retail funds, the authority found, are more likely to use service providers that are related parties because they often operate within broader financial conglomerate structures. Typically the provider is the parent company of the trustee or the provider and trustee have a common parent.

Such relationships are found in 39 per cent of retail funds, 10 per cent of corporate funds and not at all in the other two types of funds.

If time spent is important, the average industry fund directors spent the most time inside and outside board meetings, 1364 hours a year, compared with the average retail fund director who spend the least amount of time on average, 559 hours.