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News
www.fssuper.com.au Volume 13 Issue 04 | 2021
Rest firms up net zero pathway
Default MySuper fees drop to 1%: Rainmaker
Elizabeth McArthur
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Industry fund Rest has released its roadmap to net zero and scenario analysis on the impact of climate change on investment returns. Rest said scenario analysis and stress testing of its investment portfolio has estimated members will be better off if the global community acts to keep temperature rises to well below two degrees Celsius by 2100. “Climate change poses a material financial risk to our members’ retirement savings and it’s critical that the global community takes collective action to meet the goals of the Paris Agreement,” Rest chief investment officer Andrew Lill said. The fund has set six measures to achieve a net zero carbon footprint by 2050. By the end of this year, it plans to divest from all listed companies that derive more than 10% of revenue from thermal coal, with the caveat “unless the company has a credible net zero by 2050 plan or science-based targets”. “We will advocate for an economy-wide reduction of emissions of 45% by 2030, based on 2005 levels, particularly in order to continue reducing the Weighted Average Carbon Intensity of the equities portfolio year on year,” the fund said. Rest also aims to increase investment in renewable energy and low-carbon assets to $2 billion by 2025 and aims to have directly owned property assets achieve net zero carbon emissions in operation by 2030. By 2026, the fund wants to allocate 1% of the portfolio to impact investments. fs
Jamie Williamson
The numbers
$2200
The average amount paid in fees by a super fund member in 2021.
ew analysis from Rainmaker Information shows about 60% of all MySuper products reduced their fees last financial year, with the average fees paid by members now sitting at 1%. The 13.5 million Australians with a MySuper account currently pay less than $30 billion a year in fees after a year of reductions across not-for-profit and retail super funds. In the last decade, super fees have fallen by a quarter, with about half of the action taking place in the last three years alone. Six in 10 default MySuper products reduced fees in 2020/21, with fees now averaging 1% overall. The average default MySuper product now charges 1.08%, down from 1.13% the previous year. The total expense ratio for not-forprofit and retail funds is now 1.07% and 1.08%, respectively. There is also
no difference in the total fee ratio for single strategy and lifecycle products. According to the analysis, UniSuper has the cheapest total expense ratio for a public offer product at 0.65%. This is followed by Bendigo SSSE and AMG Corporate, both on 0.70%, and Virgin Super Employer (0.73%) and QSuper Accumulation (0.74%). The top 10 is rounded out by Suncorp ESB (0.77%), AustralianSuper (0.77%), AMIST Super (0.81%), Rest (0.89%) and EISS Super (0.89%). Retail fund admin fees were 3.5 times that of not-for-profit funds in 2010. This ratio has now halved but remains at 2.0 times, he said The average Australian now pays about $2200 in super fees per annum, which is a slight increase in dollar terms. However, the average account balance has also increased, particularly after the record-breaking returns most super funds saw last year. fs
No proof of member benefit: APRA APRA has found instances of expenditure by superannuation funds that does not meet the best financial interests of members, including sponsorship deals and advertising spends with no evidence of member benefit. Releasing its review of RSE licensee marketing expenditure, it found instances of failure to actually measure and assess the benefits of expenditure on marketing activities. This included a lack of clear metrics for doing so, limited evidence of review to demonstrate the intended outcome was achieve, including benefit to members, and an overreliance on aggregate considerations of marketing expenditure impact without demonstrating specific improved outcomes for members. Going into detail, APRA said some licensees were unable to articulate the purpose of the marketing expenditure as part of annual strategic and business planning. Illustrating this, APRA said one licensee that engaged in three different sponsorships over several years could not demonstrate a link between the spend and any acquisition or retention of
THE JOURNAL OF SUPERANNUATION MANAGEMENT•
members. Another licensee spent a significant amount over a three-year period while there was no reference to marketing or advertising in its business plan. APRA also found several instances where super funds renewed marketing and sponsorship campaigns without having reviewed the efficacy of the campaigns. A lack of clear metrics for measuring efficacy of campaigns saw funds rely on measures like changing member numbers and member engagement levels. Finally, APRA said it found instances of super funds being unable to demonstrate how additional benefits associated with sponsorships – benefits provided to super fund staff, directors or executives, such as tickets to sporting events – improved member outcomes. One super fund that sponsored a sporting team received additional benefits for directors, executives and staff members including corporate tickets but could not provide evidence to suggest this in any way benefited members. fs
FS Super
