Super Review November 2010

T H E L E A D I N G I N D E P E N D E N T J O U R N A L FO R T H E S U P E R A N N U AT I O N A N D I N S T I T U T I O N A L F U N D S M A N A G E M E N T I N D U S T RY NOVEMBER 2010 Volume 24 - Issue 10

Tower Australia goes back-to-back 13 SUPER REFORM Avoiding the perils of a policy quagmire

Tower Australia has won Super Review’s Group Insurer of the Year award in a back-to-back performance indicative of its growth strategy in the highly competitive market segment.

BY MIKE TAYLOR

T

14 GROUP INSURER OF THE YEAR Tower head and shoulders above rivals

16 SELF-MANAGED SUPER Print Post Approved PP255003/01111

SMSF regulation – finding the right balance

20 INSURANCE Making promises that can be kept For the latest news, visit superreview.com.au MANDATES

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Tower reclaimed the award on the weight of mandates it now holds and the survey findings, which revealed that it more than held its own with respect to claims handling and general customer service.

In doing so, Tower appeared to confound a number of critics who suggested that the size of the AustralianSuper mandate and consequent demands would undermine the insurer’s ability to maintain appropriate service levels.

In determining the rankings for Group Insurer of the Year, Super Review also relied on data compiled by the Heron Partnership defining which insurers hold mandates from particular superannuation funds.

The runner-up in this year’s award was AIA, which narrowly closed out CommInsure, based on having picked up the AMIST mandate and slightly higher client perceptions with respect to customer service.

Customer service emerged as the most important factor for superannuation funds in ranking insurance providers, but price was also a significant factor.

NEWS

ower Australia has been named Super Review Group Insurer of the Year for 2010, while Hannover Re has been awarded the Super Review Group Insurer of the Year Service Level Award.

It is the second year in succession that Tower has won the award, reflecting the manner in which it has built on its breakthrough success in winning the AustralianSuper group insurance mandate in 2009.

Tower’s win was built on the back of consolidating around the AustralianSuper mandate and growing its presence in the group insurance market this year by picking up mandates with National Catholic Super and IBM. The methodology utilised

by Super Review in determining the Group Insurer of the Year involves determining the number of mandates held by insurers, the number of mandates won during the year and feedback gleaned from superannuation fund executives in a survey conducted through late September and early October.

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EDITORIAL

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SMSFs

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It was a case of seeking to understand the needs and objectives of the company’s superannuation fund clients.

INSURANCE

The survey also underscored the reasons for the heavy resourcing directed towards winning mandates, with most funds opting to maintain their relationships with their insurers for more than five years.

Asked to comment on Tower’s strong performance in the award process this year, Tower head of group life Andrew Bolderman said it was a case of seeking to understand the needs and objectives of the company’s superannuation fund clients.

“I’d like to think that is the key,” he said.

Acknowledging suggestions last year that Tower would struggle to meet the demands created by a mandate of the size of AustralianSuper, Bolderman said Tower had been conscious of the challenge and had ramped up its staffing and its efforts accordingly. SR

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APPOINTMENTS

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EVENTS

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Mandates Received by

Type of mandate

Issued by

Amount

Colonial First State

Global resources

NGS Super

$30 million

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NEWS 3

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Dollar hedge assists September returns Warren Chant

MEMBERS of superannuation funds which hedge strongly against the rising Australian dollar were well rewarded during September, according to new data released by Chant West.

The Chant West analysis, released today, has revealed that the median growth superannuation fund returned a

healthy 2.4 per cent, resulting in a 4.3 per cent gain for the first quarter of the new financial year.

Chant West principal Warren Chant said that surging share markets in Australia and overseas had been the primary drivers for the rise and that while most funds now included a variety of alternative as-

sets in the investment mix, it had been traditional listed shares that had accounted for most of the performance.

“After a negative August, September was a bumper month for Australian and international shares and this led to strong returns for growth funds,” he said. “However, currency was also a very important factor and

ACTU pans inequitable super tax THE tax on super contributions for low-income workers is deeply unfair and inappropriate, according to Australian Council of Trade Unions (ACTU) assistant secretary Tim Lyons.

In a wide-ranging speech at an Australian Institute of Superannuation Trustees lunch in Sydney, Lyons also called for super funds to invest more in local infrastructure and dismissed criticism of an increase in the superannuation guarantee to 12 per cent.

“It is ridiculous that low-income workers pay more tax on their super than they would pay on earned income, and we are pleased that the Government has announced a proposal for a rebate for those earning less than $37,000 per year,” Lyons said.

The current superannuation guarantee of 9 per cent would not be enough for many workers, particularly casual, part-time and female employees, he said. A shift to 12 per cent would help bridge that gap, but in the long term a move to 15 per cent would be beneficial, he said.

The super system was never intended to be a replacement for the pension system but rather the two were designed to be complementary, he said.

Lyons described the gradual increase in the superannuation guarantee in 0.25 per cent increments

as a “telegraph punch” and said it would be difficult for employers to argue that an increase that gradual would be difficult to incorporate.

Jeremy Cooper’s MySuper recommendation is a vindication of the industry super model in terms of the investment portfolio, the risk and the simplicity – but it also posed a threat to that model, he said.

Australian super funds also need to find better ways to invest Australian workers’ capital in local infrastructure products without compromising investment returns, he said.

“It is unacceptable that super funds in Australia can routinely find it easier to invest in infrastructure projects overseas than in Australia,” he said.

“The Government needs to take better account of funds management decisions and design a tax and procurement framework that facilitates investment by funds in an Australian context. Too many Australian infrastructure projects involve high fees and suit investment banks and construction consortiums but not super funds,” he said.

Lyons also called on industry super funds to continue to put downward pressure on the fees that members pay and to be more engaged in environmental, social and governance issues. SR

ESI Super employs Provisio rapid advice solution INDUSTRY super fund ESI Super has extended its advice offering with Provisio Technologies’ rapid advice software solution, according to ESI Super’s chief executive, Robyn Petrou.

Petrou stated that the rapid advice software solution was “the perfect complement” to its existing advice offering.

“The rapid advice technology will allow us to provide more flexibility in the way that

members interact with us, and allow our advisers to demonstrate the benefits of different investment strategies in real time to a wider group of members,” he said.

The software solution speeds up the provision of a Statement of Advice and allows for advice to be given over the phone as the adviser demonstrates scenarios in real time online.

Provisio director Cameron O’Sullivan said solutions such

as this allowed super funds to broaden their advice reach.

“With pressure on fees, advice models must now support a quicker provision of advice,” he said. “By producing a quality Statement of Advice quickly, each member can be catered for in a fraction of the time of traditional models.”

ESI Super joins the likes of Superpartners and HESTA, which are also using Provisio’s solutions. SR

the funds that did best were those that hedged more against the rising Australian dollar.”

Chant said that retail master trusts with their higher weightings to listed shares had outperformed industry funds in September, albeit that industry funds continued to hold the advantage over the longer term. SR

MySuper an appalling prospect, says expert AN industry commentator at the Australian Institute of Superannuation Trustees super insurance symposium has hit out at the “mediocrity” of MySuper, labelling its acceptance of current super insurance cover “appalling”.

Speaking on a panel at the symposium, Carol McKelsonTimmins, the chief operations officer of Health Super, said she was “philosophically, greatly opposed” to MySuper’s acceptance of the current inadequate insurance cover of super fund members.

“When MySuper came out I can’t tell you how appalled I was to see the giving in to mediocrity, the mediocrity that says it’s okay to let these people not have enough cover, to let them go into a situation where if they have an accident, their loved ones won’t have enough left,” she said.

Health Super has a huge preponderance of women, many divorced, many in their mid 50s and carrying burdens, and the number of them who are underinsured is appalling, despite the super fund’s best efforts, McKelson-Timmins said.

Allowing funds to cross subsidise will help them with ongoing education of their members about insurance needs, and there are very practical things super funds can do to help customers assess their

Carol McKelson-Timmins

own worth and get insurance, she said.

Making clients realise about their own underinsurance was part of furthering financial literacy, she said.

McKelson-Timmins warned that any continued downward pressure on insurance premiums would lead to margin squeeze on life insurers, and if there was a deterioration in claims, it would create a large margin squeeze on insurers.

“It’s my view that some of this is not sustainable in the market,” McKelson-Timmins said.

“Whether we like it or not, we are in the not-for-profit sector and the insurers are in the opposite sector, they have shareholders, they must make a profit after tax and returns to the shareholders.”

Any more downward pressure would force a price increase for insurance, she said. SR NOVEMBER 2010 * SUPERREVIEW

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Negative investor sentiment won’t dent contributions

BY CHRIS KENNEDY INVESTOR sentiment has slipped a further 0.5 points to negative 9 points over the most recent quarter, although most investors said they would maintain or increase their voluntary super contributions, according to the latest Financial Services Council (FSC)/CoreData Investor Sentiment Index.

Sentiment is 13 points higher than it was at the beginning of 2009 but has dropped more than 16 points from where it finished in 2009, according to the survey of 770 participants from CoreData-brand management’s proprietary

database of investors, whose answers were calibrated to Australian Bureau of Statistics population data.

Despite the negative sentiment, threequarters of investors expected to maintain their current level of superannuation commitments and almost one-sixth expected to increase their contributions while just 6.5 per cent expected their contributions to decrease, the survey found.

Two-thirds of those without a super fund did not feel financially secure, while more than half of those with a super fund did, but despite this 28.8 per cent of investors were unhappy with their super funds.

“While sentiment did not deteriorate

significantly, it is clear investors remain uncertain about the future,” said FSC chief executive John Brogden.

“Investor uncertainty is not surprising given the concerns about the European and US economies and the recent period of political upheaval resulting in Australia’s first minority Government in 70 years,” he said.

While investors are reluctant to invest new money, their satisfaction with existing investments remains consistent with the last quarter at 37.7 per cent, and a further 37.6 per cent were neutral, he added.

Steady interest rates over the past three months provided a reprieve for

John Brogden

mortgage owners and meant the average household was slightly better off this quarter, according to Kristen Paech, head of advice, wealth and superannuation, at CoreData.

“However, the expectations around future economic growth suggest Australians remain unconvinced that the future is bright, despite the market recovery,” she said. SR

AMP/Sunsuper building gets five-star green rating THE Coronation Drive Office Park Building 4 in Brisbane, which is jointly owned by AMP’s Australian Core Property Portfolio and Sunsuper, has been awarded a five-star green office rating by the Green Building Council of Australia.

The award, which is based on

the environmentally sustainable construction of buildings, demonstrates AMP Capital’s commitment to sustainable projects, according to AMP’s Australian Core Property Portfolio Fund manager, Louise Joslin.

The Coronation Drive Office Park Building 4 is a state-of-

Professional Associations Super spruiks low-cost approach PROFESSIONAL Associations Super achieved a net return of 10.8 per cent for its default growth option for the year to 30 June, 2010 by taking a low-cost approach and focusing on traditional asset classes, placing it in the top quartile of industry super funds with similar risk profiles, the fund has announced.

Professional Associations Super chief investment officer Paul Kessell said the performance was due to a clearly defined investment strategy and focus on risk management.

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“We actively invest in a diversified portfolio of traditional exposures – in particular, equities and bonds – and generally avoid many of the more complex and unlisted assets that have proliferated across industry super fund portfolios in recent years,” he said.

The fund’s annual investment fee of less than 0.4 per cent is below the industry super fund average, he said.

“It proves that it is about having the right skills, process and investment governance, rather than the size of the fund, that are the critical factors.” SR

the-art ‘green’ building with an environmental design rating and energy efficient credentials, and is the first fivestar ‘as built’ building within the AMP Australian Core Property Portfolio, she said.

The energy and water savings associated with the design equate to 270 less cars on

the road and 2.7 Olympic swimming pools of water saved per year.

Sunsuper chief investment officer David Hartley said the building was now fully occupied, and the fund is now aiming for a five-star rating on the fit-out on the floors it occupied as well.

“Having a fully-tenanted building means our investment is not only reaping financial benefits, but members and our staff can feel good about being part of a project which is industry-leading in terms of its environmental rating and energy efficiency,” he said. SR

Industry funds hit at commissions - again

David Whiteley

THE Industry Super Network (ISN) has again sought to ramp up its campaign against commission-based remuneration linked to superannuation, calling on retail super funds “to categorically rule out any reporting method for

returns which fails to disclose costs such as ongoing advice fees or commissions.

The ISN statement, issued by the organisation’s chief executive David Whiteley, represents a clear attack on the Financial Services Council’s recommended reporting standards.

Whiteley said that the decision by the retail super sector to adopt a reporting method which does not include ongoing advice fees and commissions raised a number of regulatory and consumer protection concerns.

“Given the compulsory nature of super, funds have a higher duty of care to their members,” Whiteley said. “This duty of care includes the transparent reporting of fund returns net of all taxes and expenses.”

He said the ISN would support the Government working with the sector to develop industry-wide protocols for transparent and comparable reporting of investment returns.” SR

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Smaller funds more responsive SMALL to medium-sized superannuation funds appear to be moving more quickly than their larger cousins to offer innovative member services, according to the chief executive of mid-size fund Intrust Super.

Intrust chief executive Brendan O’Farrell said medium-sized funds had found it easier to stay connected with their membership and, with the addition of key services such

as travel and general insurance, were providing a better overall member experience.

He cited the addition of offerings such as car, home and contents and travel insurance as ideal additions to his fund’s product suite and proof that being big did not necessarily mean being better in terms of delivering to fund members.

O’Farrell’s comments on the ability of medium-sized funds to deliver

follow its launch of a stand alone notfor-profit financial planning business – Intrust360.

“Medium and smaller funds are often able to move faster and more efficiently to develop innovative products and enhance their members’ experiences,” he said.

O’Farrell’s comments run counter to at least some of the recommendations of the Cooper Review, which suggested fewer and larger funds. SR

SimCorp picked up by big Canadian pension fund

BY CHRIS KENNEDY THE Canada Pension Plan Investment Board (CPPIB) will use SimCorp’s flagship Dimension product for investment operations and performance measurement, SimCorp has announced.

The $130 billion fund previously outsourced these operations to a third party

but was now internalising its portfolio recordkeeping, accounting and performance measurement functions, SimCorp said.

SimCorp Dimension was able to support the breadth of CPPIB’s complex operational processes and provide the scalability needed to meet the needs of its existing, new and growing in-

Retirees’ cost of living down this quarter vestment programs, according to SimCorp.

“What stood out to us immediately was the level of integration between investment operations and performance processes that SimCorp Dimension provides,” said Benita Warmbold, senior vice president and chief operating officer at CPPIB. SR

Future Fund offloads Telstra in portfolio rebalance THE Future Fund has sold 113.6 million Telstra shares, reducing its holdings in the company from 10.9 per cent to 10 per cent.

The on-market sale was part of the fund’s long stated objective of rebalancing the portfolio by reducing its holding in Telstra over the medium term, the fund’s board of guardians advised at a senate estimates hearing.

The sell-down was executed at an average price of $2.66 between 29 September and 19 October. The board’s selling activity was conducted smoothly and in an orderly manner to avoid untoward market impact,

averaging less than 14 per cent of the volume of Telstra shares traded over the period, the fund stated.

Proceeds from the sale will be integrated into the broader portfolio and the board announced it intends to continue rebalancing its portfolio in an orderly manner over the medium term.

Relevant considerations for the sale included the February 2010 expiry of the board’s self-imposed lock-up, equity market conditions and liquidity, and the assessment of alternative investment opportunities, the board stated. SR

CommInsure appoints wholesale underwriting manager COMMINSURE has appointed Huw Parry as its new executive manager for wholesale underwriting after an extensive market search, the insurer announced.

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Parry will join CommInsure on 15 November after previously working as a group risk underwriting manager at ING for five years.

Parry has worked in in-

Brendan O’Farrell

surance since 1996, starting out in the UK before joining AIA New Zealand in 2000, where he held underwriting and business development roles, before moving to Australia in 2006. SR

THE cost of living for a retired couple who live ‘comfortably’ is down 0.2 per cent on June figures, according to new figures from the Westpac ASFA (Association of Superannuation Funds of Australia) Retirement Standard.

The 0.2 per cent decrease compares to an overall 0.6 per cent increase in the consumer price index (CPI), which was inflated by the increased tobacco excise, but Retirement Standard budgets don’t incorporate a tobacco allowance, according to ASFA. Other factors were a

large drop in recreation costs due to decreases in domestic and overseas holiday travel and accommodation costs. Audiovisual and computing equipment costs were also down.

This year has also seen a slight drop in the costs of fruit and vegetables due to easing of the drought.

The cost of health services rose due to an increase in insurance premiums and transport costs were also up slightly due to rising petrol prices.

Because retirees tend to own their own homes

they are less affected by housing costs and also spend less on education services.

Overall, a couple looking to achieve a comfortable retirement needs to spend $53,456 a year, while those seeking a ‘modest’ retirement lifestyle need to spend $30,382 a year, ASFA stated.

For the purposes of the study, a comfortable lifestyle included a broad range of leisure and recreational activities and travel, while a modest lifestyle included only fairly basic activities, according to ASFA. SR

QIC launches alternative to ILBs QUEENSLAND-based institution Queensland Investment Corporation (QIC) has launched a new product: the QIC Global Fixed Interest Inflation Plus Fund.

The product, developed by QIC’s Global Fixed Interest boutique, has being marketed as delivering inflation plus returns with less volatility.

The company said the fund would actively manage interest rate and inflation exposures separately to deliver a return target of Australian Consumer Price Index plus 4 per cent a year over a rolling three-year period.

Announcing the new product, QIC Global Fixed Interest managing director Susan Buckley said the traditional approach to protecting

against inflation from a fixed income perspective had been to invest in inflation-linked bonds.

“But this approach has a number of limitations which impact on investment outcomes,” she said. “Many investors don’t realise that a key risk in an inflation-linked bond benchmark is interest rate risk, not inflation risk,” she said.

“A typical inflation-linked bond benchmark can have nine years of interest rate duration, which can result in significant volatility for investors in what is often thought to be a conservative investment strategy,” Buckley said. “In a rising interest rate environment, the long duration of these benchmarks can also lead to negative returns.” SR

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Issued by BlackRock Asset Management Australia Limited ABN 33 001 804 566 AFS Licence 225398 (BlackRock). BlackRock is the responsible entity of any fund(s) referred to in this document. BlackRock, its officers, employees and agents believe that the information in this document is correct at the time of compilation, but no warranty of accuracy or reliability is given and no responsibility arising in any other way for errors or omissions (including responsibility to any person by reason of negligence) is accepted by BlackRock, its officers, employees or agents. This advertisement contains general information only and is not intended to represent general or specific investment or professional advice. The information does not take into account an individual‘s financial circumstances. An assessment should be made as to whether the information is appropriate in individual circumstances and consideration should be given to talking to a financial or other professional adviser before making an investment decision. The Lonsec Limited (“Lonsec”) ABN 56 061 751 102 rating (assigned as follows: BlackRock Indexed Australian Equity Fund, BlackRock Indexed International Equity Fund, BlackRock Indexed Hedged International Equity Fund, BlackRock Indexed Australian Listed Property Fund – May 2010, BlackRock Indexed Australian Bond Fund and BlackRock Global Bond Index Fund “ April 2010) presented in this document is limited to “General Advice” and based solely on consideration of the investment merits of the financial product(s). It is not a recommendation to purchase, sell or hold the relevant product(s), and you should seek independent financial advice before investing in this product(s). The rating is subject to change without notice and Lonsec assumes no obligation to update this document following publication. Lonsec receives a fee from the fund manager for rating the product(s) using comprehensive and objective criteria. To the extent that any ratings, opinions or other information of Standard & Poor’s Information Services (Australia) Pty Ltd (ABN: 17 096 167 556, Australian Financial Services Licence Number: 258896) (“Standard & Poor’s”) constitutes general advice, this advice has been prepared

by Standard & Poor’s without taking into account any particular person’s financial or investment objectives, financial situation or needs. Before acting on any advice, any person using the advice should consider its appropriateness having regard to their own or their clients’ objectives, financial situation and needs. You should obtain a Product Disclosure Statement relating to the product and consider the statement before making any decision or recommendation about whether to acquire the product. Past performance is not a reliable indicator of future performance. Ratings can change or cease at any time and should not be relied upon without referring to the meaning of the rating. For more information regarding ratings please call S&P Customer Service on 1300 792 553 and also refer to Standard & Poor’s Financial Services Guide at www.assirt.com.au. Each analytic product or service of Standard & Poor’s is based on information received by the analytic group responsible for such product or service. “S&P” and “Standard & Poor’s” are trademarks of The McGraw-Hill Companies, Inc. © 2007 Standard & Poor’s Information Services (Australia) Pty Limited.

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Self-managed investors need protection from themselves

BY CHRIS KENNEDY THE rise of self-managed retirement investing will present an increasing challenge for regulators, because they will need to protect investors who may not have appropriate investment experience from gambling away their retirement savings, according to BT Financial chief executive Brad Cooper.

The current focus of regulatory reform around raising industry standards is right for our current needs but the next big regulatory move will be around protecting many investors from their own ability to derail their own financial security,

Cooper said at the Finsia Financial Services Conference in Sydney yesterday.

Rules and regulations have already surfaced in this segment of the industry to make sure investors don’t rort the system, such as preventing investments in artworks or lifestyle assets, and this approach will need to round down and provide more protection to some investors, he said.

“The alternative is just to say ‘look, if you want to do it yourself then just go for it’ and let the self-directed investors live according to the consequences of that,” he said.

But there isn’t a plan B for people who have great intentions and enthusiasm

Brad Cooper

but not the requisite time, expertise or access to information, and they could end up gambling away their retirement savings, which is a risk our country can’t

afford to take, he said.

Three key themes for the future are developing a sustainable retirement system, the responsible investment of retirement savings, and protecting consumers, Cooper said.

He also called for the urgent implementation of SuperStream reforms and the use of tax file numbers to help simplify the rollover process.

Near term imperatives for the sector are to restore investor confidence and trust, to lift engagement levels, to get more efficiency and hence greater return, and to attract and retain the best people, he concluded. SR

New SMSF borrowing rules spark interest in residential property SELF-MANAGED super funds (SMSFs) are getting ready to redirect about $32.2 billion in investments to residential property, but a lack of knowledge could have costly consequences, according to Perpetual Private Clients and Capital 360.

Perpetual Private Clients and Capital 360 stated that more SMSFs were looking to invest in residential property, but there was a lack of knowledge around

borrowing and how residential property fits into a portfolio.

According to their estimates, approximately 15 per cent of the existing allocation to cash and shares of SMSFs – worth about $34.2 billion – would be redeemed to acquire property over the next few years. However, many SMSF trustees did not seek specialist advice and therefore were not aware of the potential tax implications and

penalties that may be incurred, they stated.

Senior manager strategic advice at Perpetual Private Clients, Chris Balalovski, said recent legislative changes had led to a noticeable rise in the number of clients seeking advice and strategic guidance on borrowing arrangements in SMSFs. Balalovski asserted that trustees needed to ensure they understood the legislative and

Super funds need to offer value SUPERANNUATION funds cannot hope to establish trust with their clients simply by communicating with them, according to Metlife head of product, pricing and reinsurance, Richard Anderson.

Speaking at the Australian Institute of Superannuation Trustees super insurance symposium, Anderson said the only way to establish trust with fund clients was by offering something valuable to them, like free advice.

There was a trend for people to increasingly ignore traditional authority figures, such as bank managers, and trust instead in new models of authority like “money saving experts”, Anderson said.

“The only way to establish trust today is by offering something valuable or credible to your customers, while interaction with them doesn’t offer any value, it actually undermines your authority,” he said.

Anderson also suggested that super funds should engage with the membership by “piggybacking” off their client’s existing routine.

“People tend to find things simple that they do over and over again, so if you can piggyback [off] an already existing routine, the SUPERREVIEW

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Richard Anderson

chances are that you’re likely to engage them,” he said.

Customers also tend to “navigate” through confusing or distracting material to find out if something is valuable to them, so super funds should create easy methods or “shortcuts” through distracting information, in order to show the value of their services, Anderson said.

“Highlighting something that helps our clients take these shortcuts means our customers are less likely to pass over us, or our products or services,” he said. SR

compliance requirements.

“Firstly, it must be established that the trust deed allows a borrowing. The strict rules then state that the borrowing must be in line with the fund’s investment strategy and take into account the future financial needs of all members,” he said.

“Failure to do so may result in a fund becoming non-complying and losing its tax concessions.

It’s also important for trustees

with existing arrangements to have their deed reviewed to ensure they comply.”

He added that the nature of the holding trust, which had the custody over the property, and the details of the loan documentation were commonly neglected.

“The result of this could mean unexpected stamp duty and capital gains tax liabilities,” Balalovski said. SR

ASFA calls for bipartisan support on super policy THE Association of Superannuation Funds of Australia (ASFA) has called for a bipartisan consensus on superannuation policy settings, reinforcing its support for the super guarantee increase to 12 per cent.

ASFA chief executive Pauline Vamos said the first two steps should be ensuring Australians put in enough money for retirement and making the taxation treatment certain to encourage additional contributions.

“The constant risk that ‘things will change’ is detrimental to achieving a public policy outcome that reduces reliance on the age pension, particularly with the ageing population,” Vamos said.

She claimed increasing the SG as a means to increase the super savings pool was the best way to achieve better retirement outcomes, adding ASFA research and analysis indicated that the adoption of the Henry Report’s

recommendations on superannuation would not be as effective in delivering adequate retirement incomes.

“The Henry proposals, if adopted, would reduce retirement savings for many, if not most Australians and would involve a range of implementation and equity problems. They would also be a disincentive for the majority of middle income Australians to save further for their retirement,” Vamos said.

ASFA research found that increasing the SG would boost an average Australian’s retirement savings by $110,000 and aggregate national retirement savings by half a trillion dollars.

According to Vamos, the Shadow Treasurer is “wrong to paint the industry superannuation sector as being controlled by the union movement”, adding all sectors of the industry have been calling for an increase in the superannuation guarantee. SR

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Pension should be included in super projections

BY CHRIS KENNEDY SUPERANNUATION funds should include all member benefit projections, including age pension entitlements in annual member statements, according to an Institute of Actuaries of Australia survey.

The majority of respondents, who included super fund chief executives, senior management and actuaries, also agreed that providing projections would encourage members to increase their voluntary contributions by giving them a more accurate idea of how well

off they would be in retirement.

Institute of Actuaries chief executive Melinda Howes said that results showed standardised assumptions, including both a lump sum and annual income estimate and age pension entitlements, would be among the best ways to produce meaningful projections.

While the vast majority of respondents agreed assumptions on how to calculate investment returns should be standardised across the industry, slightly more than half believed fees should be specific to the super fund, rather than a standardised fee assumption.

About 60 per cent of respondents agreed a projection should be provided to individual members based on the investment strategy that they have chosen, such as conservative, balanced or growth.

Projections should vary based on investment strategy and show a range of outcomes for different investment options or different contribution rates, the survey found, although some respondents said it would be better to keep projections as simple as possible.

“There is a need to balance the amount of information provided in a

Telstra Super launches calculator LARGE corporate fund Telstra Super has broken new ground by launching a publicly available retirement calculator that incorporates an investment market simulator.

Telstra Super’s general manager of client development, marketing and communications, Kevin Moloney, said the Telstra Super Simulator would allow users to generate a realistic whole of life snapshot of how their current savings plan would position them for retirement.

He said the simulator complemented the services of Telstra Super Financial Planning.

“By accessing the simulator through our secure SuperOnline portal, members will see relevant information automatically populated, including their age, super balance and investment choice,” Moloney said.

He said this would provide members with an immediate idea of how their current savings behaviour compares to what they might have been hoping for. SR

Shorten releases discussion paper on MIT tax system THE Minister for Superannuation and Financial Services, Bill Shorten, has released a discussion paper on the design and implementation details of the Government’s new income tax system for managed investment trusts (MITs).

The Government announced the new tax system for MITs earlier this year and said it would remove the longstanding uncertainty around the treatment of the income of MITs. Shorten said key features of the new MIT tax system include an elective ‘attribution’ system of taxation under which investors will be taxed only on the income the trustee allocates them and the ability to remove double taxation that can arise in certain circumstances, SUPERREVIEW

*

NOVEMBER 2010

Bill Shorten

among others.

“Once implemented, the Government’s reforms will increase certainty for managed funds, re-

duce complexity and lower costs for MITs and their investors,” said Shorten, adding these changes will take effect from 1 July, 2011.

A further round of public consultation on exposure draft legislation is planned for later this year, while it is expected that legislation will be introduced into the Parliament in the first half of 2011.

Two major features of the new tax system for MITs have already been legislated. The trustee of a MIT can choose to apply the capital gains and losses regime to the disposal of eligible assets. Also, most foreign investors will have a reduced rate of final withholding tax of 7.5 per cent applied to fund payments from a MIT. SR

Melinda Howes

superannuation benefit projection with the goal of providing a useful tool for members,” Howes said.

“The form [projections] should take and how they are calculated is a matter for debate but the most important factor should be that it helps people save for retirement,” she said. SR

Professional Associations Super announces Paceline sponsorship PROFESSIONAL Associations Super has announced it will sponsor the Paceline ride to help raise awareness and funds for people suffering from cardiac arrhythmias.

National sales manager for Professional Associations Super Mark Ashburn will be one of the 20 riders who will ride 1100km along the coast from Adelaide to Melbourne from 16 to 23 October.

“Professional Associations Super exists to help people make their lives easier in retirement,” Ashburn said.

“With more than 400,000 Australians having one kind of cardiac arrhythmia and that number increasing in prevalence as people reach retirement age, this is an opportunity to help make retirement easier physically, as well as financially,” he said.

Ashburn hopes to raise $60,000 through the ride, which he is completing for the second time.

“In the past three years, Paceline has raised over $30,000 for the Baker IDI Heart and Diabetes Institute and the Victor Chang Cardiac Research Institute, with rides across the USA and from Melbourne to Sydney. This year, Professional Association Super has donated $5000 to Baker IDI to help Paceline reach their target and develop a better understanding of the cause and cures of cardiac arrhythmias,” he said. SR

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EDITORIAL 13

www.superreview.com.au

Still doing the doable The Government must pursue the doable priorities of product rationalisation and SuperStream or risk a policy implementation quagmire.

Mike Taylor

F

or most of the past decade the Australian financial services industry has lobbied successive governments on the issue of making adjustments to the tax system sufficient to allow people to be migrated out of costly and outdated legacy products without financial detriment.

Thus, there will be many in the industry who would have been disappointed to note a link being made between Government action on legacy products and the Cooper Review’s MySuper concept – it represents a dangerous combination of policy ingredients and, arguably, one that should be avoided.

The impact of legacy products on both consumers and financial services businesses has been an issue now handled by no fewer than five ministers. It also represented one of the first issues discussed by the former Minister for Financial Services,

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Chris Bowen, when he assumed the portfolio from Senator Nick Sherry in August last year.

At that time, Bowen referenced the “lack of a mechanism to deal with old legacy products” and the consequent need for “a more streamlined approach to product rationalisation”.

It says something about Bowen’s intentions that by the middle of last December he had released a proposals paper “as the next step in consultation with stakeholders on product rationalisation for managed funds and the life insurance industries”.

In doing so, he described product rationalisation as being “a process of converting or consolidating products, such as managed fund or life insurance products, of a similar nature into a single product with equivalent features and benefits”.

“The proposed product rationalisation mechanism offers a specific solution to the range of issues involved in the process of removing outdated products and transferring investors into newer and better products,” Bowen said. “Importantly, a proposed ‘no disadvantage’ test would ensure investors are not disadvantaged by product rationalisation.”

EDITORIAL Managing Editor – Mike Taylor Ph: (02) 9422 2712 Fax: (02) 9422 2822 email: mike.taylor@reedbusiness.com.au Features Editor – Angela Faherty Ph: (02) 9422 2210 Fax: (02) 9422 2822 email: angela.faherty@reedbusiness.com.au Reporter - Chris Kennedy Ph: (02) 9422 2819 Fax: (02) 9422 2822 email: chris.kennedy@reedbusiness.com.au Contributing Reporter – Damon Taylor email: damon.taylor@c-e-a.com.au Ph: 0433 178 250

While some might argue that the MySuper concept represents the ultimate in product consolidation, this is a dangerous misconception.

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Bowen’s proposals paper outlined proposed tax relief for product rationalisation and argued that the rationalisation mechanism would benefit investors by transferring them into modern products with superior features.

Responses to the Government’s proposals paper closed in late February this year, and nine months and one Federal Election later, the issue appears of be in danger of becoming unduly enmeshed in the debate and consultations flowing from the Future of Financial Advice (FOFA) reform proposals and the recommendations of the Cooper Review.

Given Bowen’s own analysis in August last year that the majority of legacy product issues relate to insurance and funds management products, roping the issue into the FOFA and Cooper proposals not only risks imposing further unwarranted delay, but also the creation of an overly complex debate encompassing unqualified stakeholders.

While some might argue that the MySuper concept represents the ultimate in product consolidation, this is a dangerous misconception. If MySuper is to be debated at all, it must be debated as a single and separate issue – not something that would stand in the way of progress on crucial and self-evident initiatives such as product rationalisation and SuperStream.

Indeed, in circumstances

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where some leading industry figures have questioned whether MySuper can actually deliver the cost savings it promises and at a time when Federal politicians are demanding that major policy initiatives be subject to cost benefit analyses, there is good reason to keep MySuper out of the immediate policy mix.

The new Assistant Treasurer and Minister for Financial Services, Bill Shorten, has been frugal in his public utterances on his immediate priorities with respect to policy implementation, but things were expected to become clearer after an address to a Financial Services Council function in late October and during his opening of the Association of Superannuation Funds of Australia national conference in Adelaide.

Shorten has already indicated that the Government remains focused on simplifying the superannuation system but he clearly appreciates that the political realities inherent in a hung Parliament will limit the degree to which he can move.

In those circumstances, there would be many in the financial services industry who would be urging the minister to pursue the immediately sensible and doable: product rationalisation and SuperStream.

Between them, product rationalisation and SuperStream will simplify the operation of the industry and reduce costs to consumers and superannuation fund members. SR

expresssed in Super Review are not necessarily those of Super Review or Reed Business Information. © 2010

ABN 80 132 719 861 ACN 132 719 861

Average Net Distribution Period ending Mar ‘10 2,327

NOVEMBER 2010 * SUPERREVIEW

14 GROUP INSURER OF THE YEAR

www.superreview.com.au

Towering over group insurers Price and customer service have emerged as key determinants in Super Review’s Group Insurer of the Year survey.

T

ower Australia Limited’s deliberate and continuing push into the group insurance space off the back of winning the AustralianSuper mandate in 2009 has seen it named as Super Review’s Group Insurer of the Year for a second successive year.

Tower reclaimed the award on the weight of mandates it now holds and the findings of Super Review’s Group Insurer of the Year survey, which revealed that it more than held its own with respect to claims handling and general customer service.

While AustralianSuper represents the undoubted foundation of Tower’s group insurance business, it holds around 18 other mandates including two significant wins in the past 12 months – National Catholic Superannuation Fund and IBM. As part of the award process, Super Review relied on a Heron Partnership assessment matching group insurance mandates to particular insurers.

The runner-up in this year’s award was AIA, which narrowly closed out CommInsure based on having picked up the AMIST mandate and slightly higher client perceptions with respect to customer service.

However what became clear in Super Review’s second annual Group Insurer of SUPERREVIEW

*

NOVEMBER 2010

the Year research is that the major insurers are prepared to be highly competitive on price when competing for mandates from the major superannuation funds.

While customer service was nominated as being of primary importance by clients, price emerged as the second most important factor. What is more, price seemed to be the common denominator with respect to differentiating the market leaders – Tower, Hannover and CommInsure.

Asked what they regarded as the major strengths of their group insurance providers, a significant majority of the respondents (84.7 per cent) nominated customer service, while 53.9 per cent nominated price.

However price appeared to be a particularly dominant factor with respect to the funds that nominated Tower, Hannover and Comminsure as being their group insurance providers.

The survey also revealed one of the major reasons for the strong competition for mandates in the sector: a distinct lack of short-term churn.

According to respondents to the survey, most mandates had extended beyond five years with almost 100 per cent of the funds surveyed suggesting that they would

be prepared to shortlist their existing provider if they were calling for renewed expressions of interest.

While the survey suggested that the levels of service provided by group insurers was generally of a high standard, some of the insurers appeared to be less well regarded than others.

Tower emerged as winner for a second year on the basis that around 60 per cent of its client respondents rated its claims handling and customer service as excellent, while CommInsure suffered because while 60 per cent of its customer respondents rated its claims handling and customer service as ‘good’, only 40 per cent rated it as ‘excellent’.

AIA rated marginally ahead of Comminsure with around a 50/50 split between customers rating its claims handling and customer service as ‘good’ or ‘excellent’.

AIA also received better marks with respect to product design.

The winner of the Super Review Group Insurer of the Year Service Level Award for 2010 was Hannover, with 70 per cent of customer respondents rating its customer service and claims handling as ‘excellent’. Small specialist provider Australian Income Protection also rated highly, but lost out to Hannover because of the relatively small size of its customer base.

Where product design was concerned, both AIA and Metlife emerged at the top of the survey results, closely followed by Tower and Hannover. SR

Length of mandates?

38.60%

Five years or more Less than five years

61.40%

Source: CEA/Super Review

Single or multiple group insurance mandates?

15.40%

Single Multiple

84.56%

Source: CEA/Super Review

What is most important in a group insurer?* 61.50%

53.90%

Price Customer service Product design Claims handling 48.30% 84.70%

Source: CEA/Super Review

*More than one answer provided

GROUP INSURER OF THE YEAR 15

www.superreview.com.au

Heron list of insurers October 2010 Rank Product

Default Death and TPD Insurer

Default Salary Continuance Insurer

Rank Product

Default Death and TPD Insurer

Default Salary Continuance Insurer ING Life

1

Accountants Superannuation Fund

CommInsure

CommInsure

59

ING Integra Super

ING Life

2

AESuper – Australian Enterprise Super

CommInsure

CommInsure

60

ING OneAnswer Personal Super

ING Life

ING Life

3

AGEST

CommInsure

CommInsure

61

Intrust Super

Hannover Life Re

Australian Income Protection

4

AMG Universal Super – Personal

Hannover Life Re

Hannover Life Re

62

TOWER Australia

AMG Universal Super – Employer

Hannover Life Re

Hannover Life Re

IOOF Portfolio Service Corporate Superannuation

TOWER Australia

5 6

AMP – Flexible Super

AMP Life

AMP Life

63

TOWER Australia

TOWER Australia

7

AMP CustomSuper

AMP Life

AMP Life

IOOF Portfolio Service Employer Superannuation

8

AMP Flexible Lifetime – Super Easy

AMP Life

AMP Life

64

TOWER Australia

TOWER Australia

9

AMP Flexible Lifetime Super

AMP Life

AMP Life

IOOF Portfolio Service Personal Superannuation

10

AMP SignatureSuper

AMP Life

AMP Life

65

Legal Super

ING Life

ING Life

11

AMP SuperLeader

AMP Life

AMP Life

66

Local Government Superannuation Scheme Accumulation Scheme

TOWER Australia

TOWER Australia

12

ANZ Super Advantage

ING Life

ING Life

67

LUCRF

ING Life

ING Life

13

Aon Master Trust – Personal Division

AIA Australia

AIA Australia

68

Make A Choice Superannuation Master Trust

ING Life

ING Life

14

Aon Master Trust – Standard Solution

AIA Australia

AIA Australia

69

Media Super

Hannover Life Re

15

Asgard Elements Super

AIA Australia

AIA Australia

International Underwriting Service

16

Asgard Employee Super

AIA Australia

AIA Australia

70

Member’s Choice Superannuation Master Plan MLC Life

MLC Life

17

Asgard eWRAP Super

AIA Australia

AIA Australia

71

Mentor Employer Superannuation Plan

ING Life

ING Life

18

Asset Super

MLC Life

MLC Life

72

Mercer SuperTrust

AXA Australia

AXA Australia

19

AUSCOAL Superannuation Fund

CommInsure

n/a

73

MLC Employer Super

MLC Life

MLC Life

20

Australian Meat Industry Superannuation Trust

CommInsure

CommInsure

74

MLC MasterKey Business Super

MLC Life

MLC Life

21

AustralianSuper

TOWER Australia

TOWER Australia

75

MLC MasterKey Custom Superannuation

MLC Life

MLC Life

22

AustSafe

CommInsure

CommInsure

76

MLC MasterKey Super & Pension

MLC Life

MLC Life

23

AXA Generations – Personal Super

AXA Australia

AXA Australia

77

MLC MasterKey Super Fundamentals

MLC Life

MLC Life

24

AXA Simple Super

AXA Australia

AXA Australia

78

MLC Navigator Access Super and Pension

MLC Life

MLC Life

25

AXA Summit – Personal Super

AXA Australia

AXA Australia

79

MLC Navigator Retirement Plan

MLC Life

MLC Life

26

AXA Super Directions for Business

AXA Australia

AXA Australia

80

MTAA

MetLife

MetLife

27

AXA Tailored Super

AXA Australia

AXA Australia

81

Nationwide Superannuation Fund

ING Life

ING Life

28

Bendigo Personal Superannuation

Tower Australia

Tower Australia

82

netwealth Super Wrap

AIA Australia

AIA Australia

29

BT Business Super

AIA Australia

AIA Australia

83

NGS

CommInsure

CommInsure

30

BT Lifetime – Personal Super

AIA Australia

n/a

84

OAMPS Super Fund

AXA Australia

AXA Australia

31

BT Lifetime Super – Employer Plan

AIA Australia

AIA Australia

85

Perpetual Select Superannuation Plan

AIA Australia

AIA Australia

32

BT Super for Life

Westpac Life

Westpac Life

86

Perpetual WealthFocus Super Plan

AIA Australia

AIA Australia

33

BT SuperWrap Personal Super Plan

Westpac Life

Westpac Life

87

Plum Superannuation Fund

MLC Life

MLC Life

34

CareSuper

CommInsure

CommInsure

88

Prime Super

MetLife

MetLife

35

Catholic Superannuation Fund

TOWER Australia

TOWER Australia

89

Pursuit Core Personal Superannuation

TOWER Australia

TOWER Australia

36

Cbus

Hannover Life Re

Hannover Life Re

90

Pursuit Select Personal Superannuation

TOWER Australia

TOWER Australia

37

Christian Super

Hannover Life Re

CommInsure

91

RecruitmentSuper – EasyChoice

CommInsure

n/a Lumley General Insurance

38

Club Plus

CommInsure

CommInsure

92

RecruitmentSuper – SelectSuper

CommInsure

39

Club Super

MLC Life

Australian Income Protection

93

Rei

MetLife

MetLife

40

Colonial First State FirstChoice Employer Super

CommInsure

CommInsure

94

REST

AIA Australia

AIA Australia

41

Colonial First State FirstChoice Personal Super

CommInsure

CommInsure

95

Russell SuperSolution Master Trust

TOWER Australia

n/a

42

Colonial First State FirstChoice Wholesale Personal Super

CommInsure

CommInsure

96

Spectrum Super

TOWER Australia

TOWER Australia

97

Statewide Superannuation Trust

MetLife

MetLife

98

Strategy Retirement Fund

ING Life

ING Life

99

Suncorp WealthSmart Business Super

Asteron Life

Asteron Life

100

Suncorp WealthSmart Personal Super

Asteron Life

Asteron Life

101

Sunsuper

Suncorp Life

Suncorp Life

43

CONNECT Superannuation Plan

ING Life

n/a

44

Energy Industries Superannuation Scheme – Accumulation Scheme

TOWER Australia

TOWER Australia

45

Equipsuper

Hannover Life Re

Hannover Life Re

46

Equity Super Freedom of Choice – Business Super

TOWER Australia

TOWER Australia

102

Tasplan

CommInsure

CommInsure

47

Equity Super Freedom of Choice Super

TOWER Australia

TOWER Australia

103

Taxi Industry Superannuation Fund

ING Life

n/a

48

ESSSuper Accumulation Plan

CommInsure

CommInsure

104

Telstra Super – Personal Plus

TOWER Australia

TOWER Australia

49

First State Super

MetLife

ACE Insurance

105

TOWER The ARC Corporate Plan

TOWER Australia

TOWER Australia

50

FIRST Super

ING Life

ING Life

106

TOWER The ARC Personal Plan

TOWER Australia

TOWER Australia

TWUSUPER

CommInsure

CommInsure

51

FSP Super Fund

ING Life

ING Life

107

52

FuturePlus Super

TOWER Australia

TOWER Australia

108

Unisuper Accumulation Super (1)

Hannover Life Re

Hannover Life Re

53

Government Employees Superannuation Board – GESB Super

AIA Australia

AIA Australia

109

VicSuper Beneficiary Account

AXA Australia

AXA Australia

110

Vision Super

CommInsure

CommInsure

54

GuildSuper

AIA Australia

AIA Australia

111

WA Local Government Super Solutions

TOWER Australia

TOWER Australia

55

Health Super

AIA Australia

AIA Australia

112

Wealthpac Superannuation Service Employer Division

TOWER Australia

TOWER Australia

56

HESTA

ING Life

ING Life

57

HOSTPLUS

ING Life

ING Life

113

Wealthtrac Superannuation Master Trust

ING Life

ING Life

58

ING Corporate Super

ING Life

ING Life

114

Westscheme

TOWER Australia

TOWER Australia

Source: Heron Partnership

NOVEMBER 2010 * SUPERREVIEW

16 SMSFs

www.superreview.com.au

Finding the balance for The findings of the Cooper Review have given self-managed superannuation funds increased legitimacy but, as DAMON TAYLOR writes, people are still questioning the way SMSFs are being treated for regulatory purposes.

S

elf-managed superannuation funds (SMSFs) represent the fastest-growing segment of the industry, accounting for almost a third of assets – suggesting to many that the time has come for the Government and regulators to treat them accordingly.

SMSFs can no longer be called a cottage industry, and for Sharyn Long, chair of the Self-Managed Superannuation Fund Professionals’ Association of Australia (SPAA), the developments of 2010 have only served to reinforce that fact.

“The last 12 months have been a period where we’ve been particularly active and I think our voice has been heard to an extent that it hasn’t previously,” she says. “Our representation and involvement with the Cooper Review, our involvement in the hand-down of the Henry Review and also of the Federal Budget, the fact that we were able to influence the Minister [Chris Bowen, former Minister for Financial Services, Superannuation and Corporate Law] and have an outcome as far as the Minister’s final decision on collectibles and the recommendations of Cooper.”

“All of these things demonstrate that the SPAA has a real and significant voice, as does the SMSF sector,” she adds.

Graeme Colley, technical manager of SMSF administrator SuperConcepts, says that the Cooper Review’s recognition of SMSFs SUPERREVIEW

*

NOVEMBER 2010

and the important role they now play in Australia’s wider superannuation industry has been a particularly dynamic change.

“Prior to that, people were treating self-managed fund [trustees] as someone they didn’t want to talk to,” he says. “And obviously that should never have been the case. The reality is that they’ve been one third of the industry for a long, long time and if you look at the stats that are coming out from the ATO [Australian Taxation Office] that presence only seems to be increasing.”

“At this point, the next key change is largely dependent on whether the Cooper Review will actually be implemented either in part or in full,” Colley continues. “A lot of the change that’s been flagged has to do with competency standards and one of the criticisms coming from the bigger parts of the industry have been that people in the self-managed fund space are relatively incompetent because things like RG146 (Regulatory Guide 146) certainly don’t require that you have expertise or knowledge of SMSFs to go out and talk about them.

So if that sort of change comes in and those criticisms are deflected, that’s definitely another space to watch.”

Echoing Colley’s view regarding negative perceptions of SMSFs from the ‘bigger end of town’, Long says that for many industry participants, SMSFs have

been considered a nuisance.

“But I think that’s changed now and Jeremy Cooper [Chair of the Super System Review] and the Minister [Bill Shorten, Minister for Financial Services and Superannuation] and everyone who’s influential has basically said that while SMSFs are not there for everyone, they are a valid part of the sector and they do suit a certain demographic of people who want to have control,” she says. “There’s always going to be further to go when it comes to increasing the profile of SMSFs but one of the fundamental things we see in superannuation is constant change.”

“It undermines credibility and people become nervous as a consequence. The one thing that people say to me most often is ‘Well, that’s all well and good now but what will be the rules when I do retire?’ and ‘If I put my money in now, is it still going to be tax free in 10 years time when I’m ready to retire?’” continues Long. “So stability

and consistency is key here. We all acknowledge that there’s still some way to go in terms of the Cooper recommendations that haven’t been endorsed or those that the Government hasn’t commented on and we’ve still got the Financial Service Reform happening as well.”

“So there’s no doubt that we still have a way to go but what we’re saying is that things aren’t broken, we’re tweaking the edges a little here and there but we do need to restore consumer confidence right across the sector,” she adds.

Indeed, given the significant strides made by the self-managed sector of the super industry to this point, one of the more interesting questions to be posed is whether they are now a concern for industry and retail fund trustees. To date, their growth has not slowed meaningfully at any point and according to John McIlroy, CEO of Multiport, their attraction to superannuants has been a concern for mainstream

funds for some time.

“Certainly for the retail sector, when you look at the money that’s going out of retail-based funds and wraps, significant parts of that are going into SMSFs,” he says. “Some institutions actually identified it a while ago and have looked to put offers or arrangements in place so that they don’t necessarily completely lose the money.”

“In our own situation, being a subsidiary of AXA since the middle of last year, they identified three or four years ago that they wanted to be a player in this market and that was not only because they thought it was going to be an area of growth, but because they were losing money to the sector,” McIlroy continues.

“And I think it’s a similar story for most institutions. You’ve now seen companies like SuperConcepts becoming part of ANZ, Multiport being a part of AXA, Perpetual owning SmartSuper, so you’ve seen evidence of it occurring already. So from retail

SMSFs 17

www.superreview.com.au

SMSFs

funds’ point of view, it’s obviously a pretty significant issue for them and I’m sure we’ll see more organisations do things in this area.”

For Long, the reality of an increasingly competitive market means that retaining members has to be a core concern for all funds.

“And my personal view is that SMSFs possibly have a lot to gain from the MySuper product,” she says. “Its still to be decided what final form that will take but my understanding of how its proposed right now is that every APRA-regulated [Australian Prudential Regulation Authority] fund in Australia is going to have to offer a MySuper product which is going to be a low-cost, no bells and whistles type of product which will suit the 60 to 70 per cent of members who are disengaged.”

“The 30 or 40 per cent of membership that are engaged, those who want the more sophisticated products and who

want better insurance options and more investment choice will potentially incur a larger cost to have those products within a larger fund that’s offering a very low cost product to the majority of members,” Long adds. “So in actual fact, those funds may be disadvantaged when that MySuper product comes in because they may not get the economies of scale that they need to be able to provide the more sophisticated products, those products with more bells and whistles for those members who want them.”

According to Long, a likely response from those members with higher account balances could easily be looking to a SMSF as a better option.

“In a SMSF, they may be able to achieve what they’re looking for at a lower cost than what they would pay if they remained with an industry or retail fund,” she says. “Time will tell on this.

We still have some detail to play out on how MySuper will actually look but if it goes ahead as it has been suggested, then I think if you can’t get that in one of those not-for-profit or retail funds at a reasonable cost then you are going to look for alternatives and SMSFs offer a viable alternative.”

Naturally, all is not entirely rosy for SMSFs. Despite the progress that the sector has made in recent times, there are problem areas yet to be covered and for McIlroy, chief among them is compliance.

“There are a lot of funds out there that are run very well but there’s also a lot of funds that aren’t run terribly well and there is certainly room for general improvement,” he says.

“The question is how do you make them improve. Obviously the ATO has increased their resources in the audit area but if they were to increase their resources a bit more, then that might improve things a bit.”

“Unlike ASIC [the Australian Securities and Investment Commission], the ATO also doesn’t seem to publicise it too much when it penalises people for breaches so perhaps there’s not enough acknowledgement that if people do breach the rules, then there’s a serious consequence,” McIlroy continues. “For instance, there was a case just recently where the ATO fined a trustee $55,000 and they were on 12 months of periodic detention.”

“Now if they publicised it when they are imposing more significant penalties, then it might make a few people take a bit more notice.”

Alternatively, while Colley agrees that raising compliance standards is still a challenge for the SMSF sector, he says that increasing the publicity of noncompliance as a deterrent is not always possible.

“In the super industry’s current form, you’ve got APRA looking at the larger superannuation funds in that prudential

Graeme Colley

way, looking at systems and the way in which the processes operate whereas with SMSFs, the ATO looks at the sector at a more micro level because that’s where the compliance issues are,” he says. “I know that [deputy Commissioner of the ATO] Niel Olesen, in one of his recent speeches, did mention there were a number of issues

that are still coming up and one of his concerns is just the lodgement of returns because while it’s improved, he still isn’t absolutely happy with the percentage of returns that were being lodged for self-managed funds.”

“In terms of publicising noncompliance, the Commissioner is bound by secrecy provisions,” Colley continues. “That’s the difficulty here because even though he may wish to publicise the reasons for some of the penalties that are being imposed, its only when things get to court that it becomes public information.”

“Improvement here has to be a gradual process. The Commissioner already highlights those compliance areas he’s most concerned with as a general rule, so things like nonlodgement and borrowing, and they’re the things that need improvement but I think generally the regulators see that the SMSF area has made significant progress.”

Yet beyond compliance, one of the more common arguments around SMSFs, and one the sector cannot seem to shake, relates to minimum account balances. The argument has always been that an account balance of $200,000 or less is insufficient to take full toll of the advantages that SMSFs boast however, according to McIlroy, the question really comes back to cost.

“I actually used to be an adviser and my recommended entry point was probably a bit higher than $200,000, not so much because it might not be economical but because if you’re trying to get diversity through a SMSF, you’ve got to have a reasonable amount of money in there,” he says. “But if you used an example of $150,000, if I’m in a retail fund I’m probably paying around

about 1.5 per cent so can I do that inside a SMSF? If the plan is to have 10 shares, a cash account, maybe a couple of managed funds, then the answer is yes, I probably can get it administered for similar amounts of money.”

“I think it comes down to comparing the cost of where you are now and then, if you moved to self-managed, how are you going to invest it,” adds McIlroy. “If I was investing it all back through a wrap account, then economically it doesn’t make sense but if you’ve got a direct investment portfolio where I’m not incurring a second lot of administration fees, then it can be okay.”

McIlroy says that while the sale of SMSFs to people for whom they aren’t appropriate is always a possibility, he would never be in favour of a mandated minimum account balance.

“In many ways, imposing some sort of minimum account balance barrier would be impossible because you could be starting off with $100,000 but then intend to pump it up with contributions,” he says. “Providing that the regulations ensure that there is adequate disclosure of what the costs are, then there’s no problem here.”

“It really comes back to the disclosure aspect of it and making sure potential SMSF trustees understand exactly what the costs are.”

Colley says that if a superannuant is going into an SMSF from a cost point of view, then between $150,000 and $200,000 is around about the break-even point.

“Now often people in the initial years won’t have $150,000 or $200,000 that will go into super but over a reasonable number of years, if they contribute full amounts, you would hope that they get up around Continued on page 18 ☞

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18 SMSFs

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Finding the balance for SMSFs ☞ Continued from page 17 those levels,” he says. “So if cost is the sole issue, it might be worth putting your money into another fund and then rolling it over into a SMSF later down the track.

“And if that’s not the issue, you’ve just got to be prepared that in the earlier years that it may be relatively expensive to put your money into the SMSF,” Colley continues. “What I would point out though is that you don’t see other superannuation funds saying that from a cost point of view, there are other funds that are cheaper than the fund you’re in now.

That’s something that’s certainly not being said at the larger end of town.”

Pointing out that Jeremy Cooper as well as current and former Ministers for Financial Services and Superannuation have all said that they aren’t going to stipulate a minimum account balance for SMSFs, Long says that provided trustees are getting sound advice about the establishment, they should understand the consequences of what they’re doing and the costs associated with it.

“It’s true that the majority of costs associated with SMSFs are fixed costs so therefore the lower the account balance, the more you’re going to pay as a percentage of your assets,” she says.

“However, trustees should be sophisticated enough to know that and advisers should be pointing that out very clearly to clients before they establish SMSFs.” “People think we need to mandate a minimum account balance because quite often SMSFs are started and then rollovers come in and they take time or they’re established with a view to putting in retirement assets and so on,” Long continues. “There could be any number of reasons for establishment and any number of SUPERREVIEW

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reasons why you may have quite a small account balance on day one, but the bottom line is that there’s a lot of complexity around how you administer a minimum account balance to start with. My view is that the way to deal with that is ensure that advisers are providing the right advice and that trustees are fully informed before they establish.”

“It’s obviously something that the wider industry has picked up on and it’s something that SMSFs have received criticism for, but the vast majority of funds actually have much stronger account balances than anywhere near the minimum that’s being suggested.”

Of course, as with all sectors of superannuation, waiting in the wings for Australia’s SMSFs is the potential change that may result from Jeremy Cooper’s Super System Review. Yet with respect to the SMSF changes that seem likely, Long suggests that the proposed removal of the accountants’ licensing exemption has already taken much of the focus.

Sharyn Long

“The accountants’ exemption will be a big factor in the coming period in terms of how that plays out,” she says. “The recommendations are that it will go, but what form of licensing will be required for accountants is still subject to industry consultation.”

“The majority of people who establish a SMSF see their accountant in the first instance,

and under the accountant’s exemption, an accountant can assist a client in establishing an SMSF,” Long continues. “If that exemption is removed then an accounting practice will need to have a licence in order to be able to provide advice on establishing a SMSF, whereas at the moment, an accountant can’t provide advice on other sectors unless they hold the appropriate licence.”

Long says that as things stand, the accountant’s exemption has limitations in that they can only provide advice on one particular sector: SMSFs. “They can’t provide it across the board; they can’t provide advice and compare products,” she says. “So obviously there are limitations in the current model and it needs to be changed, but whether we will go to full licensing which I think is what has been suggested, that has yet to play out but certainly has the potential to change the way we operate currently.”

Focusing not just on the removal of the accountants’ licensing exemption but also on the combined effect of proposed changes, McIlroy says that he anticipates the changes will impact SMSF service providers rather than trustees.

“If you combine a couple of

things together, one being the potential removal of the accountants’ exemption, secondly the registration of auditors and additional requirements for more education, and then additional requirements on licensed advisers giving advice in this area and having specific education in SMSFs,” he says. “If you put all of those things together, then given the thousands of service providers in this area we believe there will be a rationalisation in the number of service providers.”

“I think the stats are that over half of accountants have 30 or fewer funds as clients and realistically, for a lot of them, that’s not really an economic number of funds to get registered, do training, do all of those sorts of things,” McIlroy continues. “So the demands on the practices for registration, additional education, whatever, may push some of them to say that they can’t be bothered anymore.

You might see them outsourcing work, potentially doing joint ventures with financial planners or instead of doing the audit work themselves, farming it out to specialist auditors.”

“We can see quite a bit of rationalisation happening which will probably compress the

number of service providers in the industry and mean that those remaining will be truly specialised.”

Yet irrespective of the change that may come from the Cooper Review and the areas of improvement that remain for SMSFs, the fact remains that this is a sector of superannuation that has earned its growing legitimacy and for Long, continued growth is inevitable.

“But the lifting of standards in professional advice for all service providers to the sector is critical,” she says. “Maintaining the status quo and not changing for change’s sake is also vital. We really need bipartisan support on superannuation and we need to stop fiddling with it.”

“If you’re in your 40s now and you’re not going to retire for 20 or 25 years, you want to know that the rules you invest under or accumulate your savings under are going to be the same as the rules you retire under,” Long continues. “And that doesn’t only affect SMSFs, it’s just that because SMSF trustees are more engaged, they tend to be much more concerned about such issues.”

“But certainly, stabilising current legislation is going to be fundamental to the strength of this sector.”

According to Colley, though the sector has its fair share of challenges, it is tracking well.

“When you hear Jeremy Cooper say that SMSFs could be the fund of choice in 20 or 30 years time, that certainly seems to give it a fairly bright future,” he says. “And if we see an improvement in the competency on both the adviser and administrator side of things, then hopefully that will flow through to members and trustees.”

“If that happens and we continue to see strong retirement outcomes then at the end of the day, I don’t think you can complain about SMSFs.” SR

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Delivering on the promises Service delivery has become the focus for the big insurers servicing the Australian superannuation industry and, as DAMON TAYLOR writes, product support and claims handling have become important differentiators.

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onsolidation of mandates and services delivery emerged as the key focus for most insurers through 2010.

With the challenges of the global financial crisis behind them and with an acknowledged underinsurance gap as a backdrop, insurance providers have had the opportunity to consolidate their services as a key differentiator for those funds seeking a competitive advantage.

According to the chief executive officer of MetLife Insurance Australia Marc Lieberman, most insurers have grasped that opportunity firmly.

“From a MetLife perspective, I think our focus for the last 12 months has been really reinforcing our technology and service capabilities,” he said.

“I’m a firm believer that service is going to be a differentiator into the future and firms like ours need to do everything we can to provide top-notch service and technology so that super funds have the ability to provide better information, easier processing, easier access for their members and an overall better experience. So that’s been a big focus for us.”

“As far as the super industry itself goes, I think there’s been some of that but I think there’s also been a lot of focus on the potential consolidation and deals that have been in the press over the last six to 12 months and that’s probably been a bit of a distraction,” Lieberman continued. “We’re not involved in any of that so it has actually been quite good for us because it gives us clear SUPERREVIEW

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focus and the ability to really concentrate on what we need to, which is making sure our technology and service offering is as solid as it can be.”

Acknowledging that the insurance being provided by super funds had become an important differentiator, head of group life for Tower Australia Andrew Boldeman identified three areas of focus.

“At the moment, we’re seeing a very heavy focus on insurance and a faster pace of activity as funds increasingly look to use insurance to differentiate themselves from each other,” he said.

“I’d really call out three main areas of focus, one being the products side so updating more frequently and a faster pace of change.”

“Communications is another one. We’re seeing a lot of funds [that] have grappled with how to make insurance as easy as possible to understand for their members, so easier to understand communications, making the nature of the benefits that members have easier to understand and also making it easier for members to execute on changes,” Boldeman continued.

“Then third on the list is service because it’s attracting a lot of attention from a fund perspective.”

“So that means looking to deliver that member service experience and improving that service and really considering what’s the best way of doing things, what are the right avenues and really looking at broader ranges of communication and greater use of technology,” Boldeman added.

In general, Lieberman said that it was clear that super funds were taking a long hard look at the insurance offerings being provided to their members.

“They’re re-evaluating them in terms of whether they’re appropriate and whether they’re providing the right levels of service,” he said. “I think there’s a general understanding and acceptance that Australians are underinsured, that doesn’t seem to be debated by anyone, and that where insurance is held by most Australians is through their super fund.”

“Super funds are taking an increased level of responsibility in ensuring that they’re providing enough and making sure that it’s at a sufficient level, knowing that it may be the only insurance that a member has,” Lieberman added. “And that’s certainly a positive.”

“Underinsurance is a big problem and anything these industries, both the insurance industry and the super industry, can do to help rectify that is to the benefit of everyone.”

Undoubtedly service is topof-mind for both insurers and super fund trustees. Yet the constant battle within the insurance space is balancing what insurers refer to as ‘the whole insurance package’ against an unavoidable bottom line in price per unit of cover – and according to Lieberman, it is one insurers had to be aware of.

“Obviously funds are always going to have to decide how much they can afford to pay per

member for insurance coverage and then they’ve got to decide how they’re going to split that up amongst various benefits,” Lieberman said. “Ultimately it really does come down to dollars per unit cover.”

“However, I will also say that what I’ve seen in the past six months being in Australia is a bit of price compression which is to the benefit of the super funds,” added Lieberman. “So I think they’re getting more coverage for a lower price than they were two or three years ago and that translates directly to the benefit of the member.”

Altering the perspective slightly, general manager of wholesale life at CommInsure Claire Roberts said that the key

driver for premium levels was member affordability.

“The primary purpose for super is to provide for the member at retirement,” she said. “So the proportion of a member’s account balance that can be diverted to fund efficient and lowcost life insurance is a matter that the funds trustees take very seriously.”

“In addition to this is the competitive nature of the insurance industry that has, in recent years, resulted in downward pressure for insurance premiums,” continued Roberts.

“Most forms of insurance follow a cyclical pricing pattern and we expect this downward pressure to moderate to a realistic and sustainable level.”

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Roberts said that product design was also a key driver of premium with funds focused on ensuring that their members had appropriate cover and that it was easy to access with no or minimal underwriting.

“And that has resulted in a general move toward higher automatic acceptance levels [AALs], more suitable levels of cover for younger and older members and life event triggers that provide access to increased cover for members when they need it.”

“So the likely future trend is toward simpler, easier-to-understand product designs.”

Lieberman said that when it came to cost and value for

money, though they would always be key factors in the provision of superannuation-based insurance, trustees were looking for much more than a low price point.

“I can only speak for our customers but I know that we work very closely with them to try to keep service levels high, costs low and we try to find ways to enhance the experience,” he said. “So shorter turnaround times for underwriting, shorter turnaround times for claims management, reduced prices overall – things like that.”

“And I’d guess our competitors are doing the same thing; I would certainly hope they are,” Lieberman continued. “There is a general sharper pencil out there on both sides trying to make sure things are better than they have been and that’s kind of a philosophy that we have. I’ve had that conversation with several of our clients and they say: ‘Well, what’s different now as compared to three years ago?’”

“And my response is that I hope what they’re receiving now from MetLife is better than what they were receiving three years ago both from a service and a price standpoint.”

Not surprisingly, Lieberman said that he also hoped that two and three years into the future, the benefits, price and service being received by MetLife clients would again be better than what they were receiving today.

“And that’s simply because our philosophy is one of continuous improvement,” he said. “We can’t afford to plateau because we’ve got to constantly get better and if we’re not, I expect our clients to give us a wake-up call and say ‘listen, what have you done for me lately?’”

Similarly, Boldeman said that while the price of insurance

cover would always attract a lot of attention, the interactions between a fund and its insurer had become just as important.

“Price or the benefit terms or even the specific product terms that are provided are always going to be one aspect; that’s what always attracts a lot of attention as funds consider their insurance,” he said. “But I think that of as much importance, if not of even more importance, is funds considering how they interact with their insurer, how they’re going to interact with each other on an ongoing basis, how they share ideas, the effectiveness of the two parties actually working together to deliver quality solutions to their members.”

“Many funds have increasingly found that while price is important, they also need to work with these people and so the relationship needs to allow communication and get solutions,” Boldeman continued.

“And to me, that’s very much what people are talking about when they talk about that ‘whole insurance package’.”

Asked how conscious funds were that insurance was about much more than price, Boldeman said that the evidence certainly suggested as much.

“That’s definitely what I’m seeing,” he said. “Increasingly this is the major decision in placement, those other services that go well beyond price per unit of cover.”

“It’s easy to compare price and that’s always going to be a very major driver behind funds’ decisions but I’m definitely seeing this increased focus on the other parts of the proposition,” Boldeman continued. “But for some time now, the industry has been on a path of improvement in terms of the way all insurers are interacting with their funds.”

“They’re doing so with a greater degree of flexibility and

a greater degree of personal service.”

Aside from price and service however, recent years have also seen the use of insurance-based technology increase exponentially. From data analytics to online calculators to claims management, the role of technology is vital and, according to Lieberman, one that can be a differentiator in and of itself.

“On the group side, we’ve done a tremendous amount of work over the last 18 months in developing e-technology, e-application, e-lodgement, and eclaims is being rolled out as I speak,” he said. “We recognised quite a while ago that enabling members and the super fund administrators to access our

Andrew Boldeman

systems online, be able to provide information and query online was going to be critical.”

“We consider it table stakes really, we don’t even consider it an enhancement,” continued Lieberman. “It may be that we’re one of the few offering it right now in an active and live way for our clients but I would expect everyone should be down the road and we’ll continue to work to enhance and make it as easy as possible.”

“Again, that has been a huge area of focus but what I hope is that it allows members to have better access, understand what they have better and therefore

be able to make more informed decisions.”

Roberts said that compared to other sectors, the life insurance industry had been relatively slow to embrace technology.

“That has begun to change and for wholesale insurance in particular, increased competition in the superannuation industry has highlighted a range of opportunities,” she said. “Superannuation funds, most notably industry funds, have endeavoured to deliver greater services and improved customer experience to their members and insurers have responded with a range of technology innovations.”

Citing a number of technological developments that had occurred within the insurance industry, Roberts said that the first and most prominent had been enabling fund members to apply for additional insurance online.

“That’s also coincided with improvements to product design such as higher AALs for cover without the need for underwriting,” she said. “Though coupled with relatively low levels of online member activity, member take-up for this capability appears to be low.”

“Claims notification and tracking is another key area of opportunity,” continued Roberts.

“CommInsure were first to market enabling administrators to upload claims information through an online portal and to track claims status to reduce cycle times and make it easier for administrators.”

“CommInsure is also proud to announce another market first for wholesale insurance with SMS status updates direct to the claimant for income protection claims.”

Reflecting on the fact that technology within superannuation-based insurance was Continued on page 22 ☞

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22 INSURANCE

☞ Continued from page 21 primarily about informing and enabling members, Lieberman said that it was gratifying to have seen relatively significant progress.

“One of the toughest things about this business is that very often the only time a member will even look at what their benefits are is if they have a situation happen where they need to lodge a claim,” he said. “And that’s really not the right time to examine what your benefits are.”

“So the more we can do to make the information easier to access, easier to understand and more readily available to the member is only going to better the situation.”

Of course the one inescapable issue when discussing insurance and its provision within the super industry is underinsurance. But as an issue identified some years ago and one that insurers are acutely aware of, Boldeman said that both the insurance and super industries had made significant strides.

“I think progress has definitely been made and in terms of action, I see it being made in two ways,” he said. “One is by making it easier for members to exercise choice and understand choices to increase cover on a voluntary basis; and also from a default perspective, by making sure that the default levels of cover for those who are relying on their trustees and not making an actual choice, on making sure that those default levels are appropriate.”

“I’d say on both counts we’ve seen significant progress over the last few years,” continued Boldeman. “We’ve seen a number of high profile funds actually increase default levels of cover, they’ve thought through the affordability of that cover by researching members and understanding that members are SUPERREVIEW

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actually happy paying for a higher degree of insurance cover and they’ve responded to that.

That is genuine progress.”

Espousing a very different view, Lieberman said that when all was said and done, progress in terms of bridging an acknowledged underinsurance gap had been minimal.

“I don’t think we’ve come far at all, quite frankly,” he said.

“I don’t think we’re doing enough as an industry and I don’t think the Government’s doing enough in terms of educating people and I think that’s really the only way you can attack it.”

“You’ve got to get people to understand the purpose of insurance, why it’s being offered, why they need it,” continued Lieberman. “It’s not a lottery ticket, it’s an income protection vehicle should the income of a loved one or a partner be diminished or made to go away completely in the case of death.”

“So it’s really through education – and other than isolated incidents, I don’t think we as an industry or as a country have done very well at it.”

Yet the reality, according to Lieberman, is that Australia is not unique in that respect.

“That’s the problem and I think that’s where, if the industry can work with the Government most effectively, it should be around education,” he said.

“The focus has to be really getting people to understand what insurance is for, why they have it and why they should pay attention to how much they have and how much they need. There’s no other way.”

Asked whether there was any yardstick that the super and insurance industries could use to gauge their progress in bridging Australia’s underinsurance gap, Boldeman said that the unfortunate reality was that doing so would always prove difficult.

We need to let Australian super funds know that we’re here and that we’re here to stay and that we do have that strength and expertise behind us.

“It’s a good question and there’s no one right answer unfortunately,” he said. “The reality of all of this is that none of us wants to be in the situation where we need to call on the money and in a situation where you’re leaving dependants behind or you’re disabled.”

“Obviously, it’s always better to have more money rather than less but I think the constraint in many cases is actually just affordability,” continued Boldeman. “Funds have to manage to that broader insurance need but also ensure that insurance premiums aren’t a drain on their members’ long-term retirement benefits either.”

“They’re probably the key points to consider in terms of when enough’s enough but, at this stage, just looking at average salary and an event in which someone at age 30 is disabled and can’t work for another 35 years, the majority of Australians would really be in a significantly less favourable position than they might imagine.”

So with underinsurance and

an increasingly competitive superannuation industry framing all activity for group insurers, what then are insurers’ focuses?

For Tower, Boldeman said that the road ahead would be about enhancement.

“For us specifically, we’ll be continuing to build our capabilities to support our clients,” he said. “So enhancing our support team, enhancing our products and differentiating service.”

“We’ll be continuing to invest heavily in technology, so not as much bring new technology solutions to bear but just enhancing current ones and making it easier for members to execute and interact and engage with our funds.”

On the MetLife side of the fence, Lieberman said that the focus was expansion.

“We’re looking at expanding our business,” he said. “To be completely honest, when I came to Australia it was with the intent of turning MetLife into one of the top group insurance providers to superannuation in Australia in the next few years.”

“I think that when you look at MetLife’s strength as a global brand, and our pending acquisition of Alico (which will close in a couple of weeks), we’re already the largest insurance company in America and we’re soon to be one of the largest in the world,” Lieberman continued. “We need to let Australian super funds know that we’re here and that we’re here to stay and that we do have that strength and expertise behind us.”

“We’re firm believers in the value of insurance, and when you see that people don’t have the coverage that they need and you know the difficulties that can cause should a tragedy happen, it almost becomes a mission to figure out a way to rectify it.” SR

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MetLife appoints insto head US-based Insurer MetLife has moved to boost its presence in the super space.

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etLife Insurance has hired Peter Smith as the head of institutional distribution in Australia. Smith joins the company from Marsh Employee Benefits.

In his most recent role of national manager, Smith was responsible for group and retail solutions for Marsh

RUSSELL Investments has announced three new global appointments in the alternative investments space.

Egidio Robertiello has been hired as managing director of alternative strategies focusing on hedge funds, Spephan Breban will perform the role of director of private equity, and Samuel Baughn has been appointed as director of operational due diligence.

Based in Russell’s New York office, Robertiello will be responsible for developing and implementing Russell’s hedge fund capabilities on a global scale.

As director of private equity, London-based Breban will head further development of Russell’s private equity advice, while Baugn will lead its operational due diligence function.

FUND manager PIMCO Australia has announced the appointment of Michael Dale as investment specialist as the company looks to expand its retail presence in the Australian market.

Events Calendar

nationally.

The chief marketing and distribution officer at MetLife in Australia, Eric Reisenwitz, said Smith will work towards achieving overall group insurance growth.

MetLife has also announced the appointment of Jonathan Kelly, currently business development manager, as head of institutional relationship management.

Kelly will be responsible for the general development of customer relationship management capabilities, as well as retention and growth strategies for MetLife’s existing institutional customers. SR

Dale will replace Matthew McLenaghan, who has been appointed to a role within PIMCO’s institutional business as consultant relations manager.

Dale will work with Peter Dorrian, head of global wealth management, and will target the expansion of PIMCO’s presence in the retail platform and wrap markets.

Prior to joining PIMCO, he was a treasury dealer working in the fixed interest/money market sales team at Suncorp Metway.

COLONIAL First State Global Asset Management (CFSGAM) has recruited Oliver Ansted as a senior analyst/portfolio manager in the equities growth team, bringing the total headcount to 18 investment professionals.

With 15 years of experience, Ansted joins CFSGAM from Concord, where he was a buy-side senior analyst for the past four years, covering a number of sectors. Prior to Concord, he was at Ord Minnett for nine years as a Sydney-based sellside analyst.

Ansted will commence his role in October, covering gaming, insurance and diversified financials.

FIONA Balfour has joined Tower Australia as an independent nonexecutive director to the board, effective immediately.

Fiona Balfour

Balfour is presently on the board of the publicly listed company Salmat and was recently appointed

to the board of Metcash.

The chairman of Tower Australia Group, Rob Thomas, announced her appointment and said Balfour brought to the board additional expertise in fields that were highly relevant to the company.

“Fiona Balfour has more than 30 years executive experience across a wide range of businesses including financial services, health administration, aviation, information and telecommunication services, education as well as a range of notfor-profit organisations,” Thomas said.

Her previous experience includes performing senior executive roles for the Link Group, Medibank Private, Telstra Corporation and Qantas Airways.

The Self-Managed Super Fund Professionals’ Association of Australia (SPAA) has appointed Peter Crump and Andrew Hamilton to its board.

The new appointments will replace Stephen Bourke, who left last year, and Peter Burgess, who stepped down from his role on the board to take up a full-time role as SPAA’s technical director.

Peter Crump is an executive director at Portfolio Planning Solutions where he is responsible for providing financial planning advice to SMSFs. Andrew Hamilton is the managing director of Cavendish Superannuation, having previously worked across product design, software development and training program sectors, among others.

“The addition of Peter Crump and Andrew Hamilton to the SPAA board will provide valuable input to SPAA policy efforts, which will benefit both members and the SMSF industry,” said SPAA chief executive Andrea Slattery. SR

Super Review’s monthly diary of superannuation industry events around Australia and abroad.

NOVEMBER NEW SOUTH WALES

SOUTH AUSTRALIA

5 – FSC Industry Briefing. Irish Funds – Opportunities for Australian Fund Managers.

Speaker: Gary Palmer, chief executive of the Irish Funds Industry Association. Venue: The King Room. Level 24, 44 Market Street, Sydney.

10-12 – ASFA National Conference and Super Expo. Spring into Action. Venue: Adelaide Convention Centre. North Terrace, Adelaide.

Enquiries: ASFA Member Services Unit.

Ph: (02) 9264 9300 or 1800 812 798.

Fax details of conferences, seminars and courses to Super Review on (02) 9422 2822 NOVEMBER 2010 * SUPERREVIEW

ROLLOVER

THE OTHER SIDE OF SUPERANNUATION

Double Billed

ROLLOVER is pleased to see that the new Assistant Treasurer and Minister for Financial Services, Bill Shorten, will be opening this year’s Association of Superannuation Funds of Australia (ASFA) national conference in Adelaide this month.

However, in the competitive environment that exists between the organisations purporting to represent the financial services industry, Shorten’s presence at the ASFA conference is not quite the coup it might at first seem.

You see, the new minister will have spoken around 10 days earlier at a Financial Services Council (FSC) luncheon in Sydney.

Rollover wonders whether it was a case of the FSC having better lobbyists or how things fitted in with the new minister’s very busy diary.

Whatever the case may be, both events are expected to be very heavily attended in circumstances where there has been plenty of speculation about the Government’s immediate policy intentions for the financial services industry and very few genuine answers. SR

Life at the top ROLLOVER sends his best wishes to Richard Borysiewicz following his departure as chief executive of Amundi Asset Management.

Amundi announced Borysiewicz’s departure at the same time as announcing that his successor was former State Streeter and Schroders operative Brian Scott.

As is the tradition with such announcements, Rollover received one or two emails speculating on the circumstances of the changes at Amundi, but it is worth remembering the origins of the company: the merger of

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the asset management arms of Credit Agricole and Societe Generale.

Recent history suggests that any merger between asset managers results in changes at the top.

Borysiewicz took up the reins as chief executive at Credit Agricole in 2007 after he had been sales and marketing director at Skandia.

Rollover reckons it says something about the state of the financial services industry that the names Credit Agricole and Skandia are not part of the Australian brand lexicon these days. SR

Stopping traffic Rollover confesses to occasional bouts of car envy, particularly when he sees superannuation fund executives driving cars that might be classified as, well, just a bit upmarket.

He is never particularly surprised to see fund managers driving around in cars carrying a prestigious German marque, but he sometimes wonders whether superannuation fund executives are entirely reflecting their members’ best interests when they

are driving cars in a price bracket over $60,000.

Being the churl that he is, Rollover decided to casually raise this moral issue with a particular fund executive last month and found himself being put back in his place.

It transpires that the large German-manufactured car had been privately purchased second-hand from one very careful owner.

Rollover is suitably chastened. SR

Party pooper EACH year the Association of Superannuation Funds of Australia carefully guards news of the venue for its next national conference, thus enabling a grand announcement to be made by the chairman or the chief executive.

It should therefore go without saying that, each year, efforts are made by those with not enough to do to find out the venue ahead of time.

Rollover does not want to spoil anyone’s fun, but he thinks Queensland is splendid albeit a little humid in November. SR

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