POWERED BY MOMENTUM MEDIA
Super funds need to consider unique target member outcomes
When superannuation funds conduct their business performance review during March to May 2020, as per the new member outcomes requirement, they should not lose sight of considering their unique target member outcomes, Rice Warner believes.
In an analysis surrounding the new SIS Act requirements, the research house said the new member outcomes was the biggest game changer for trustees as it determined whether the financial interests of members who held each product offered by the fund were being promoted by the trustee, with specific reference to comparable products offered by other super funds.
“In assessing the outcomes achieved for members relative to the outcomes being achieved by other superannuation funds, trustees need to consider not whether the fund is doing the best it can by its members, but whether that best is good enough,” it said.
Rice Warner pointed to the fact that the Australian Prudential and Regulation Authority (APRA) clarified that they would initially focus on MySuper products with assessments on investment returns, fees and charges, sustainability, and in due course insurance.
“The initial exclusion of insurance may be frustrating given that the SIS Act requires trustees to benchmark the fund’s insurance offers against peers in the outcomes assessment, but highlights the lack of readily available data,” Rice Warner said.
“While we would agree that additional transparency regarding the performance of all superannuation funds is to be valued, we caution that funds should not lose sight of the need for the business performance review to consider the fund’s unique target member outcomes.
“This should not entrench any existing assessment of funds into league tables. Ultimately, the member outcomes process asks each fund to think critically about what outcomes the fund is aiming to achieve for its members and how the fund’s business plan supports this.”
Rice Warner said it was not a one size fits all approach in which all funds aimed to deliver the same outcomes and service proposition, and in which the only differentiating factors were having the lowest fees and the highest past investment performance.
“While these most recent announcements have delayed the implementation of member outcomes with respect to Choice products, we encourage funds to push on with their implementation of this new work,” it said.
“Many funds are well progressed and regardless of prudential and legislative delays have incorporated member outcomes into the current year business plan and will be assessing performance against target member outcomes throughout FY20.
“Once the marketplace has settled, we expect the bar will have been raised to acceptable levels throughout the industry, and the industry can move beyond all the recent criticism.”
Recommended for you
Governor Bullock took a more hawkish stance on Tuesday, raising concerns over Trump’s escalating tariffs, which sent economists in different directions with their predictions.
Equity Trustees has announced the appointment of Jocelyn Furlan to the Superannuation Limited (ETSL) and HTFS Nominees Pty Ltd (HTFS) boards, which have oversight of one of the companies’ fastest growing trustee services.
Following growing criticism of the superannuation industry’s influence on capital markets and its increasing exposure to private assets, as well as regulators’ concerns about potential risks to financial stability, ASFA has released new research pushing back on these narratives.
A US-based infrastructure specialist has welcomed the $93 billion fund as a cornerstone investor.
TOP PERFORMING FUNDS
ACS FIXED INT - AUSTRALIA/GLOBAL BOND
Fund name
3y(%)pa
1
Global X GlobalX FANG+ ETF
33.51 3 y p.a(%)
2
Spire Oaktree Opportunities XI Second Close
32.68 3 y p.a(%)
3
DomaCom Lot 21 Chellaston Road Munno Para West SA 5115 Australia
31.62 3 y p.a(%)
4
Spire Oaktree Opportunities XI First Close USD
31.36 3 y p.a(%)
5
Fidante Credit Suisse Global Private Equity
29.60 3 y p.a(%)
