ROYAL COMMISSION LESSONS FROM THE - AIST Member Magazine - Australian Institute of Superannuation Trustees
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XXX AIST Member Magazine Edition 22 – March 2019 LESSONS FROM THE ROYAL COMMISSION Super in a Digitising Hot jobs changing climate the nest-egg in super 18 23 26
Contents
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Edition 22 – March 2019
From the CEO 02
Super news 03
Should super funds buy up the farm? 14
AIST Awards night 16
5
Super in a changing climate 18
SuperGrads honoured Digitising the nest-egg experience 23
AIST Advocacy
Super job market – what's hot 26
Helping to shape super 7
Industry farewells
Member news
Calendar of events
30
Back
and retirement outcomes Garry Weaven
AIST's advocacy aims to improve the retirement outcomes of the
millions of working Australians who belong to profit-to-member funds.
Our recent and ongoing advocacy and policy work includes:
`` Effective engagement with members `` Research that highlights the superior
of Parliament on the value of the equal performance of profit-to-member funds Interview with
10
representation system and why they are different
`` Ensuring that members of profit-to- `` Engaging with regulators and other CLARE
member funds get a fair deal on insurance stakeholders on ways to ensure Indigenous
communities get a better deal from super
O'NEIL
`` Appearing before Parliamentary inquiries
23
Lessons of the
on insurance and other key policy matters `` Strong media coverage across TV, radio,
Royal Commission
print and online on key policy issues
`` AIST Governance Code to promote best
practice in the profit-to-member industry `` Active participation in the super gender
gap debate, including highlighting the
`` Ongoing engagement with regulators
need to remove the $450 monthly income
about the need for effective fee and cost
threshold
disclosure
`` Thought leadership on housing affordability `` Support for the Women in Super policy of a
$1000 super boost for low income earners
and its impact on retirement
`` Strong support for the existing default fund `` Fostering collaborative arrangements
across the profit-to-member sector to
selection system which we believe serves
benefit fund members
working Australians best
EDITORIAL COPYRIGHT
Editor Janet de Silva No part of this publication may be reproduced, stored in a retrieval system or
Phone 03 8677 3800, jdesilva@aist.asn.au transmitted in any form or by any means, electronic, mechanical, photocopied,
Sub-editor Tyrell Mills recorded or otherwise without the permission of the publisher.
Phone 03 8677 3842, tmills@aist.asn.au
Graphic Designer Kyle Dean DISCLAIMER
@aistbuzz AIST does not necessarily recommend the products and services advertised
in SuperTalk. All details were correct at the time of printing.
Australian Institute of Superannuation Trustees
Level 23, 150 Lonsdale Street Melbourne VIC 3000 is the official magazine for the
Phone 03 8677 3800 Australian Institute of Superannuation Trustees.
Email info@aist.asn.au
Solid growth for AIST TO RAMP
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UP ADVOCACY
dominant profit-
IN CANBERRA
From the AIST is set to ramp up its
to-member super
CEO
advocacy in Canberra this year
following the release of the
Productivity Commission report
and key findings from the Royal
Eva Scheerlinck
Commission.
Chief Executive Officer, AIST Australia's profit-to-member super sector has continued to With an early April Budget
grow solidly, with the sector now well and truly the dominant and a Federal election to be
held in May at the latest, the
player in Australia's $2.7 trillion retirement savings system.
2019 has started with a bang. No easing into the new year for the industry. In a little over a month, first six months of the year will
we have had a suite of recommendations from both the Financial Services Royal Commission and be particularly busy. Meanwhile
uncertainty remains over a suite
Productivity Commission to digest and plenty for AIST to advocate for in our important role as the of bills relating to super that
representative body for Australia’s $1.4 trillion profit-to-member super sector. are currently before Parliament.
This includes significant
reforms to insurance and auto-
Covering banking, insurance Commission’s views on default fund promoting our member funds to a
consolidation in the Protecting
and superannuation, the royal selection, there is plenty in its final consumer audience.
Your Super Bill.
commission into financial services report of the super system that AIST’s commitment to high
AIST will also use its
put the spotlight on many instances reinforce the benefits and strengths standards of fund governance in the
presence in Canberra to
of shocking misconduct across of the profit-to-member model. sector and trustee education have
reiterate to all members of
banking and for-profit retail super Both the royal commission benefited the sector in establishing
Parliament the importance
funds. By contrast there were very and Productivity Commission a solid base on which to further
of keeping to the timeline to
few adverse findings relating to the recommended that Australian build consumer trust.
increase the Superannuation
profit-to-member super sector. workers only have one super We remain committed to
Guarantee rate to 12% by
Indeed, it is very clear from all account. The Productivity providing your fund with the highest
2025. The recently released
the evidence that was presented Commission was more prescriptive levels of support, professional
Productivity Commission has
to the commission in submissions, about this than the royal commission development and opportunities to
called for a halt to the 12%
witness statements and in oral and no doubt the debate around network with peers.
timeline, pending a review.
evidence, that the profit-to-member the desirability of this and the As always, we have a packed
AIST's popular annual
super sector has a lot to be proud mechanism for implementation program of events and training
Chairs Forum will again be held
of. As the hearings progressed will be hotly debated throughout for the year. In addition to our
in Canberra later this year in
the media coverage of our sector the year. AIST agrees that the vast signature events like the Conference
August.
became more and more positive majority of Australians only need of Major Super Funds (CMSF) in
with many journalists highlighting one super fund, but not necessarily March and AIST’s Super Investment Driven by a range of factors, of profit-to-member funds. APRA's
the fundamental difference between the same fund throughout their (ASI) conference in September, including members switching out latest annual statistical bulletin puts `` For further information
of retail funds following evidence the five-year average annualised For more information about the
profit-to-member funds and retail lives. we will be introducing a one-day 2019 Chairs' Forum please contact
funds – namely that profit-to- AIST member funds are now symposium for risk management revealed at the Royal Commission rate of return across the profit-to- Maryann Mannix-White at
member funds are set up only to in a prime position to leverage the professionals and training for hearings, profit-to-member funds member sector at between 8 to mmannixwhite@aist.asn.au
serve members. public’s trust in the profit-to-member contact centres. Our flagship now collectively manage more than 9.3 per cent, compared to 7 to 8
Our sector’s passionate pursuit brand. There is a real opportunity governance training, the Trustee $1.4 trillion. percent in the retail sector. Industry
of members’ best interests and to further educate members and Director’s Course, will continue to Both public-sector and industry funds were the highest performers.
returning profits to members was the wider public about the profit-to- lead trustee development options funds grew by about 10 per cent The statistics also show strong
rewarded with significant inflows member difference and the benefits in 2019. We also look forward to in the 12 months to June, 2018 growth in MySuper products,
from retail funds into the profit-to- this brings to members’ retirement. welcoming you to our new webinar (the latest available APRA data), which now manage nearly $700
member fund sector. AIST is proud to reinforce series, honouring our commitment with industry funds managing billion in members' savings,
Similarly the Productivity this message in our dealings with to delivering education in a format $631 billion in super savings. compared to just $400 billion a
Commission’s review of super government, the media, regulators that suits you. This compares to industry funds few years back.
efficiency shed a very positive and other key stakeholders. The AIST team looks forward managing $543 billion in the Using APRA's data, actuarial
light on the persistent, long-term We are committed to a strong to working with you all in what previous 12-month period and firm Rice Warner has predicted
outperformance of our sector. advocacy program in the year promises to be another busy year. $195 billion, only a decade ago. that industry funds will pass the
While AIST does not support the ahead and a heightened level of There is also plenty to $1 trillion mark in 2024 and corner
celebrate about the performance 37 per cent of the market by 2030. AIST CEO Eva Scheerlinck at
Parliament House ahead of last year's
Chairs' Forum attended by the chairs
of 25 AIST member funds.
02 SUPERTALK – March 2019 SUPERTALK – March 2019 03
IFM Investors was created by investors for
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investors and is one of the few truly-aligned
fund managers in the world.
Along with our owners – 27 industry super
funds – and other like-minded investors, we
believe in the power of long-term, sustainable
investment commitments and strategies that
aim to deliver results and ultimately enhance
people’s retirement outcomes.
CREATING LASTING GOOD
We invest on behalf of like-minded
institutions globally with one singular SuperGrads honoured
at AIST Awards
purpose – the prosperity of our investors.
To find out more visit ifminvestors.com
AIST's Manager, People and Culture, Bessie Tripatzis (left), who oversaw the 2018 SuperGrad program, with the 11 new graduates.
The 2018 SuperGrads capped The AIST-run program – which As SuperTalk goes to print,
off a big year of professional saw graduates from a range of the next crop of SuperGrads – the
development in front of a crowd disciplines employed across the class of 2019 – begin their career
of CEOs, trustees and peers at the profit-to-member sector – is now in journey in superannuation. You
2018 AIST Awards for Excellence. its 15th year. may see them in your office, so be
The 11 SuperGrads were Many previous graduates sure to say hello.
introduced to the world of profit- are now in leadership positions
to-member super in January 2018, across the profit-to-member `` For more information
after which they completed a superannuation industry, which For details on the AIST Awards for
12- month program that included is a testament to the ability Excellence, turn to page 24 or visit
www.aist.asn.au/awards
placements, residentials, mentoring of the program to set up new
and networking opportunities. professionals for success.
AIST ALERTS REGULATOR TO FALSE INFORMATION
ABOUT EARLY ACCESS TO SUPER
Several deceptive statements AIST's policy team noticed these healthcare needs was being used
made on a consumer website were false claims with concerns also appropriately.
shut down by ASIC last year thanks raised by some of our member An increase in applications
to the work of AIST's eagle-eyed funds. After a written complaint to for release led regulators and
policy team. ASIC, action was taken to remove the Government to focus on the
One of the statements the misleading statements. ways in which superannuation was
suggested superannuation was an Early access to superannuation being represented in marketing
DEBT INVESTMENTS | INFRASTRUCTURE easily accessible pool of money has been topical of late with by weight loss clinics and other
One purpose. Shared prosperity. that can be used to pay for a Treasury reviewing whether businesses.
LISTED EQUITIES | PRIVATE EQUITY variety of expenses. money being released for serious
ART_IFM082
Past performance is no indicator of future performance. This information has been prepared without taking into account the investment objectives, financial situation or
particular needs of any particular person or entity. IFM Investors Pty Ltd recommends that before making any investment decision, each prospective investor should consider
whether any04 SUPERTALK
investments – March
are appropriate 2019
in light of their particular circumstances and refer to the appropriate information memorandum for further information. IFM Investors SUPERTALK – March 2019 05
Pty Ltd ABN 67 107 247 727, AFS Licence No. 284404, CRD No. 162754, SEC File No. 801-78649.
"An authentic
Royal commission
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and unwavering
culture of
Read all about it! focussing on
Journalists who lived and The Australian's Michael net returns to
breathed the royal commission
into misconduct in the financial
Roddan also covered the royal
commission extensively and will members"
services sector will be capturing all release his first book, The People
of the colour, misdeeds and public vs The Banks, due out early April.
fury from the hearings in a series Sky News political reporter
of books due out this year. Annelise Nielsen is focussing on
Multi award-winning Fairfax the scandals in financial advice banks as well as IOOF and AMP to
investigative journalist, Adele and the history of that sector in APRA and ASIC for investigation.
Ferguson, will be releasing Money Spinners, due out in the This included conduct of bank-
Banking Bad: How greed and second half of 2019. owned and other for-profit
broken governance conspired The ABC's Dan Ziffer was superannuation funds examined
to break our trust in corporate also prolific in his coverage of the at length during Round 5 of the
Australia in August. The book public hearings and is planning Commission’s public hearings.
promises to reveal the 'story to release A Wunch of Bankers: In his final report, Commissioner
behind the story' of Ms Ferguson's A Year in the Hayne Royal Hayne concluded the conduct of
multiple investigations that Commission. fund trustees and related entities
featured in the Age/SMH, the In his final report may have prioritised the interests
Australian Financial Review, on Commissioner Hayne referred of shareholders ahead of the
Four Corners and the 7.30 Report. potential misconduct by many interests of fund members.
Industry pioneer, Garry Weaven, espouses the benefits of equal representation governance during a panel debate at the Conference of Major Super Funds, 2017.
Women in Super to celebrate 25th anniversary
2019 is a very special year WIS was created to advocate personal and professional
Industry farewells Garry Weaven
for Women in Super (WIS). The for a fairer super system to development events across
unique women's organisation improve the retirement outcomes Australia including an annual Affectionally known as the
godfather of superannuation,
many high profile women.
One of several speakers on
'Not too many
that advocates for a super system for Australian women who sadly National Road Show, as well as
without gender bias on behalf of still retire on average with less highly sought after scholarship Garry Weaven was officially the night, IFM Investors CEO Australians
its members – women working than half the super of men. In the programs in conjunction with farewelled by a who's who of Brett Himbury noted Garry's role can point to
the Australian super industry at in instilling "an authentic and
in super and aligned services,
as well as Australian women in
25 years since inception, WIS has
become increasingly recognised
renowned Australian universities
and institutions. his recent retirement dinner in unwavering culture of focussing such significant
general – is celebrating 25 years for their advocacy efforts in aid Upcoming events include Melbourne. on net returns to members", achievements'
of being the voice of women in of improving women's retirement financial wellness sessions, social in addition to his scorecard of
Stepping down as chair of the impressive achievements. Also speaking at the event, fellow
superannuation. outcomes. networking events, a keynote
IFM Investors Board and having industry pioneer and former NSW
Born during a breakfast at Mavis also recognised that talk from Macquarie Group
been at the helm of several other Mr Himbury noted the building industry union chief,
the 1994 Conference of Major by strengthening the network CEO, Shemara Wikramanayake,
highly successful collectively aggregate impact of all of Tom McDonald, similarly praised
Superannuation Funds (CMSF), of women working in super and and International Women's Day
owned organisations, Mr Weaven Mr Weaven's achievements was Mr Weaven for his vision and
WIS was the brain child of its enhancing their professional and events featuring Tracey Spicer.
was recognised as a key architect that the average working person deep commitment to the values
founder Mavis Robertson AM personal skills, these women Women in Super is also the proud
of Australia's compulsory super was able to invest as if they were of the union movement and the
(1931-2015). Its 'spiritual home' would reach higher management founder and organiser of the
system and the industry super "the largest, brightest and best collective.
– as Cate Wood, National Chair positions and could act as change Mother's Day Classic Run & Walk
sector. Mr Weaven also received resourced investor in the world". Following Mr Weaven's
of Women in Super, calls it – has agents. (more on page 9).
high praise as the founder of IFM "Not too many Australians resignation from IFM Investors,
been the AIST that provides Women in Super currently
`` For more information Investors and for helping launch can point to such significant the Hon Greg Combet AM was
support for WIS in many ways. offers around 100 inspirational, Visit womeninsuper.com.au
the careers of many in the profit- achievements and the difference appointed as the group's new
to-member industry, including this has had," Mr Himbury added. chair, effective 1 January 2019.
06 SUPERTALK – March 2019 SUPERTALK – March 2019 07
Boards tackling 2019: THE YEAR
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FOR INDIGENOUS
bigger social issues SUPER ACTION
The Indigenous Super Working Group (ISWG) is heading
into 2019 with a focus on driving more action to level the playing
field for First Australians to achieve satisfactory retirement outcomes.
Keynote speaker for ACSI's third annual Phil Spathis Governance Address, corporate director, Sam Made up of industry bodies, peak associations, NGOs and Aboriginal
Mostyn, spoke about the importance of board culture and getting the right people around the table. and Torres Strait Islander representative groups, the ISWG aims to tackle
issues such as access, engagement and adequacy. The group also explores
legislative reform to improve outcomes for First Australians.
"Phil did work on this long The annual Indigenous Super Summit will form a center piece for the
before corporate governance and year, where super funds will get together with regulators such as ASIC
culture were ingrained in Australia. and the ATO to see how the unique and often complex barriers that stop
By putting people and issues first, Indigenous Australians from participating in financial services can be
he did prescient work given what we combatted.
have seen in the financial services Pictured right, ISWG member, QSuper's Lyn Melcer provided evidence
Royal Commission," Ms Mostyn of her work with indigenous communities at the Royal Commission hearings
said. last year.
Ms Mostyn related Mr Spathis' To get involved contact AIST Media and Content Officer,
advocacy achievements with her Tyrell Mills (03) 8677 3842
experiences in sport. As the first
woman appointed to the AFL
Commission in 2005, she sees a lot
Boards are becoming better at "I think at a basic level, of similarity between the sporting
Call for super industry volunteers
tackling the bigger issues such as wer'e talking about the character world and the push for better
domestic violence, gender disparity and quality of the people that governance practices, particularly
and equality in race, according to we entrust with other people's regarding female participation.
high profile corporate director, Sam money," said Ms Mostyn, who is a "Who was to know that women
Mostyn. non-executive director of Mirvac, not only wanted to play football, but
The guest speaker at the Transurban, Citibank and Virgin coach and lead?" she said. The Women in Super Mother's Day Classic (MDC) is currently looking for passionate individuals
Australian Council of Superannuation Australia. "Like Phil, you've got to be to join its volunteer organising committees in every state and territory across Australia.
Investors' third annual Phil Spathis Ms Mostyn noted that the work doggedly determined about what
Governance address, Ms Mostyn of the late Phil Spathis in corporate needs to change."
said discussions about these issues governance, has cleared the path The ACSI event raised MDC is raised $35.3 million for breast management, communication,
were now forming the normal for today's super boards to lead on $12,279 for the Cure Brain Cancer a national cancer research. The event relies sponsorship, fundraising and
course of good governance. better social outcomes. Foundation. participation on a committed and passionate leadership, but they also expand
event held in volunteer network, many drawn their professional network
100 locations from AIST member funds who have through working with a range of
across a long history of supporting staff as other industry and non- industry
Australia. volunteers and sponsoring the event. companies."
Strong growth for restrictions on home lending,
rising funding costs, and ongoing
ME's CEO, Jamie McPhee, said
the bank expected "to increase Its aim is MDC CEO, Sharon Morris, said Ms Morris said many
super fund-owned regulatory imbalances. market share this year despite to deliver the role of a volunteer committee committee members said they
a fun, healthy and inspirational member involves working enjoyed the experience of
ME bank During the last financial
year, customer deposits grew
challenging conditions by investing
in digital experiences for customers community event that brings the across different areas such as strengthening ties to their local
Industry super fund-owned 17 per cent to $14.8 billion and continuing to develop our community together on Mother's recruiting participants, volunteers community and raising their profile
bank ME achieved solid earnings while household deposit growth suite of retail banking products and Day to support and remember and sponsors to the event, or within their own organisation.
growth last year, with the bank topped the industry, up 27 per services." those touched by breast cancer. organising on the day activities Members of our committees
achieving strong growth in its cent or nearly five times the Mr McPhee said ME's Net MDC commenced in the late and coordinating media and PR must be able to commit to being
home loan portfolio at 1.3 times industry average. This provided Promoter Score, which tracks 90s when the national advocacy opportunities. available to work.
the industry average. improvements to the quality of customers' willingness to and networking group, Women "It's a wonderful opportunity to
The result was achieved in ME's funding profile while ensuring recommend the bank, was the third in Super, determined that breast make an impact on breast cancer `` For more information
tough operating conditions, consistently high rates of return for highest across the industry. cancer research would be of the research whilst also developing Visit www.mothersdayclassic.com.au or
greatest assistance for their fund new skills," Ms Morris said. "Not email your interest to administration@
including a softening home customers. mothersdayclassic.com.au
loan market, macroprudential members. only do committee members pick
Over 21 years the event has up new job skills, such as event
08 SUPERTALK – March 2019 SUPERTALK – March 2019 09
Lessons from
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the commission
The Hayne royal commission has given us all plenty to mull over. While the majority of
the 76 recommendations in the commission’s final report released in early February
concern egregious misconduct by banks and other for-profit entities, there are
lessons for all financial services entities. Here’s a checklist of important observations
from the commission’s interim and final report.
Commissioner Hayne at the royal commission hearings in late 2018.
Culture: Noting that culture remuneration schemes fuelled a to members. Even the smallest education and training: "Those
Key recommendations had been described as ‘what greed-driven culture. He noted that website change needs a compliance who know why the step is required
for super
people do when no-one is
watching,’ Hayne observed that a
incentive, bonus and commission
schemes typically measured sales
lens. The potential impact should
not be underestimated.
are more likely to take it than
those who know only that the
AT A GLANCE
fundamental change of culture was and profit, but not compliance Staff resourcing: Many relevant manual requires it."
`` Prohibit super trustees from
68
needed in many entities. One of with the law and proper standards. entities before the royal Documentation: Improper
'assuming any obligations
his key recommendations is for the While this type of remuneration is commission blamed a lack of and inconsistent documentation
other than those' related to regulatory supervision of super funds far less common in the profit-to- staff for errors that led to poor was another concern. This was
their role within the fund. to extend to how banks and super member super sector, it does exist consumer outcomes. Hayne’s most stark in IOOF’s case, when
`` Prohibit deduction of advice funds manage non-financial risks. and should be carefully considered response was blunt: resources the company submitted hand- Days of hearings
fees from a MySuper account. He also recommends that financial in light of Hayne’s observations. are within the control of boards written board minutes as part
service entities should, as often A key recommendation in the and executives. Entities should of its evidence. But there were
`` Hawking of super products
as possible, take proper steps to final report is that remuneration be responsible for the design, other instances of entities lacking
should be banned.
`` Employees should have only
assess their culture and governance; arrangements must focus on non- maintenance and resourcing their documentation to account for key 10,000
one default super fund.
identify any problems with that financial risk, as well as financial compliance systems to ensure they decisions and the monitoring of Public
culture and governance; deal with risk. In other words, staff should be are effective. those decisions. The message for
`` Ban super trustees, under a the problems; and determine rewarded for helping customers Compliance: The interim super funds? Less is not more.
Submissions
new civil penalty provision, whether the changes made have even if this doesn’t lead to report emphasises that Whether it is the assessment of
from "treating" employers been effective. And as former increased sales. compliance should be dealt with board appointments, sponsoring
in order to have their fund regulator, Graeme Samuel, who is Independence and comprehensively rather than on arrangements or outsourcing
nominated as a default fund. set to conduct a capability review of consultants: Two of the biggest a piecemeal basis, which does agreements, the reasoning
the Australian Prudential Regulation news stories from the hearings not readily permit identification behind decisions must be fully
`` Ban grandfathered
commissions. Authority, has recently noted, cultural
change needs to be driven internally
were case studies in which so-
called independent reports
of underlying causes. In a highly
regulated industry, compliance is
documented. This also applies to
credit card expenses.
130 witnesses
by the board and management but commissioned by the industry to a necessary cost of doing business The royal commission has
doesn’t have to involve consultants. provide to regulators were shown and should be appropriately reminded us of the enormous trust
The best place for guidance on to be anything but independent. resourced. The report also notes that consumers place in providers
24
getting culture right is to start by Doctoring results or coercing that technology glitches can of financial services.
reading in full the commission’s final consultants to change their findings constitute serious misconduct From directors through to
report. This should be followed by a was found to be unacceptable. because they represent a failure to those working at the call-centre
thorough reading of APRA’s report Fund communications: In meet a contractual promise. coalface, everyone in the super
on its prudential inquiry into the many of the case studies, internal Staff training: Many case sector has a role to play in For-profit entities
CBA. Both reports are set to become and external communications were studies revealed that company ensuring this trust is well placed could face civil or criminal
the bibles for good governance and shown to be sloppy at best and policies were not well understood and members’ best interests are prosecution
culture. misleading at worst. This included or applied by junior staff. Hayne served.
Remuneration: One of Hayne’s overblown marketing statements on noted the importance of adequate
key messages was that incentivised websites and loosely worded emails
10 SUPERTALK – March 2019 SUPERTALK – March 2019 11
Royal commission timeline
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2014 2015 2016 2017 2018 16 April
Round 2: Financial advice
20 April
25 June
Round 4: Experiences with
financial services entities
in regional and remote
17 September
NAB head of wealth Andrew
Hagger resigns
2019
5 May 24 June 24 August 30 November 12 February AMP chief executive Craig communities 28 September 1 February 7 February
Meller, chair Catherine Brenner Interim report released
Final report submitted NAB CEO Andrew
‘Banking Bad’ episode Greens senator Peter Whish- Opposition Leader Bill Government announces Initial proceedings and group general counsel 14 August covering first four rounds of
to the Governor General Thorburn and Chair Ken
of Four Corners airs Wilson puts forward the first of Shorten calls for a royal royal commission commence Brian Salter resign Round 5: Superannuation hearings
many motions calling on the commission into the Henry resign
government to establish a royal banking sector during an 1 December 13 April 21 May 10 September 19 November 4 February
commission into misconduct address to the national Kenneth Hayne appointed Round 1: Consumer lending Round 3: Loans to small and Round 6: Insurance Round 7: Policy Final report released
within the financial services sector press club commissioner medium enterprises to public
Eva Scheerlinck, SuperTalk: How would you is a matter that requires careful The royal commission’s report have on the superannuation board and senior management
describe the impact of the consideration. AIST believes includes dozens of referrals to industry? time, to assure themselves about
CEO of AIST, royal commission on profit- to- members should have only one the regulators, including possible ES: Putting members’ best interests the appropriateness of fund
talks about the member super funds? fund, but not necessarily the same enforcement action against first is the paramount consideration operations, governance and culture.
impact of the royal Eva Scheerlinck: For all the funds fund throughout their life. It is
important that people engage with
the CBA, NAB and IOOF. Each
referral will require ASIC or
for super fund trustees. That Financial planning services will also
receive special attention and we will
involved in responding to Notices fiduciary responsibility should
commission and from the royal commission it has their super at different life stages, APRA to undertake a large-scale never be diluted. Our system is see changes to how financial advice
AIST’s position been a harrowing 12 months. including a change of employment, investigation of conduct they have a compulsory retirement savings services are offered to financial
particularly if this means a shift not previously undertaken – they services clients and super fund
regarding the No profit-to-member fund was
in career direction. The fund that will be starting from scratch. In
system and where members
members.
referred for further investigation are defaulted into a fund, those
commission’s for misconduct and the sector, with served you well in your first job many instances, the Commission members deserve to have
recommendations. its profit-to-member ethos, has may not be the appropriate fund has recommended investigations confidence that their fund is ST: What did the QSuper case
come out of the process intact. at a different life stage. The link to for breaches of laws that have not looking after their best interests. study show?
For the superannuation industry the industrial relations system is previously been tested. Much of If prioritising those member best ES: The QSuper case study was
as a whole it is an opportunity to vital to ensuring people who don’t the litigation that may result will interests and making a profit can an interesting moment in the royal
identify areas for improvement actively make a choice about their be novel. It is difficult to overstate coexist, then that business model commission – perhaps the only time
while reminding the industry of super fund are allocated into an the resources all of this will require. of the retail funds is not under Commissioner Hayne focused on
the extraordinary responsibility appropriate, high performing fund Realistically, we are talking about threat. But if those conflicts can’t be a positive case study rather than
and privilege it is to be trusted relevant to their industry. hundreds of millions of dollars. resolved, and members’ interests a possible case of misconduct.
with other people’s money. With APRA faces even more can’t be prioritised, retail funds But it was a powerful illustration
Recommendations nine recommendations from the ST: Commissioner Hayne was challenges than ASIC. Its behind should exit the default sector. of community expectations, in
76 relating to superannuation, and very critical of both APRA and closed doors’ approach to
Meanwhile, many members this case the expectations of
some additional recommendations ASIC. How do you think they regulating the banks has failed and
are already voting with their feet, Aboriginal and Torres Strait Islander
impacting on financial advice and will respond to this criticism cannot continue. It is encouraging
as evidence by the significant communities. The QSuper case
industry codes, there is a lot to
and what will that mean for to have Graeme Samuel leading
profit-to-member funds? additional inflows from retail study highlighted how a fund can
the capability review of APRA.
34 33 reflect on. AIST will need to work
closely with funds to identify the ES: The need for better and He is an accomplished regulator
superannuation funds into profit-to-
member funds.
treat each member as an individual
and resolve problems for that
Ethics Other right approach to tackling the stronger regulation of the financial and we expect his report will be
member. Trustees have a fiduciary
response to the recommendations, services sector is a key call to a comprehensive analysis of what
ST: What aspects of the royal responsibility to ensure that the
ensuring that members’ best action in the final report of the royal must change at the prudential
commission’s final report owner of superannuation money is
9 interests remain paramount in the
next round of government policy
commission. The report concluded
that there was no need for new
regulator and, just as importantly,
include a roadmap of how to
should profit-to-member funds reunited with it when a condition
factor into their strategic of release is triggered. The case
making on these issues. laws to fight misconduct. Rather, achieve that change.
Superannuation planning? study also highlighted the need
regulators needed to enforce the
ES: Increased regulator pressure for funds to become familiar with
ST: Does AIST support the existing laws. At the same time, the ST: The commission referred
on good governance practices the AUSTRAC guidance around
commission’s recommendation report identified the failure of the a number of retail funds for
34 recommendations and heightened oversight by identification protocols for First
on ethics and to staple members to one same regulators – notably ASIC and investigation for breaches of Nations people and to implement
professionalism fund for life? APRA to do this. their duty to act in the best both APRA and ASIC will refocus
attention on fund consolidation. this in their fund. Funds will need
ES: AIST thinks that one fund But as to whether Hayne is interests of members and to ensure staff are appropriately
recommended that regulators Fund mergers will again be a hot
is wholly appropriate for the right to put faith in the regulators trained to use the protocol or
9 recommendations must transform their topic. Funds should also consider
on superannuation vast majority of Australians. The stepping up to the plate, only escalate it to someone who can
enforcement approach. What their resourcing needs with more
mechanism of how a person stays time will tell. There are plenty of provide the required assistance.
with one fund throughout their life challenges ahead. commercial impact will this proactive regulators taking up
12 SUPERTALK – March 2019 SUPERTALK – March 2019 13
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FEATURE STORY
FEATURE STORY
XXX
FEATURE
Should super
funds buy up
the farm?
Australia has a farming sector that generates $60 billion annually, but many super funds
are reluctant to directly invest in agriculture. SuperTalk examines the observations of a
parliamentary inquiry that was set up to find out why this is so. Story by Tyrell Mills
I
T SEEMS LIKE A The last big picture investment Is agriculture high risk? Structural hurdles In all, there were four 4. And finally, establishing a
NATURAL FIT: Australian- The Inquiry heard that less recommendations made to address superannuation and agriculture
Presenting at an Inquiry Other industry stakeholders
owned super funds investing than 20 per cent of agribusinesses the issues raised in the hearings: industry working group,
hearing, Industry Super Australia's appearing before the Inquiry
in Australian-owned farms. But operate as companies or trusts 1. Improving the data available facilitated by the government to
Chief Economist, Stephen also had reservations about
for a variety of reasons – some that are capable of trading on the on the agriculture sector and stimulate mutual understanding
Anthony, explained the position of the performance of agriculture
well understood and others less stock exchange. The other 80 per making it more suitable for of areas for improvement and
industry super funds. Mr Anthony investment. Prime Super CEO,
so – Australian super funds have cent consists of owner-occupiers investment analysis through investment.
acknowledged the challenges that Lachlan Baird, told the Inquiry
never been significant investors in who are less likely to produce a roadmap to improve the
investment committees face in about past efforts to invest in
investment data that speaks the agriculture statistics system. The verdict
Australian agriculture assets. dealing with agri-investment but farming.
In May last year, a same language as super fund 2. Reducing the impact of foreign The Inquiry heard that super
maintained there was potential "It (agriculture) was a very
Parliamentary inquiry set out to investors. investment and taxation rules funds were required to invest in the
for increased investment and that poorly performing investment.
find why this is so by talking to This lack of corporatisation of by revisiting the potential best interests of their members and
the business case for large-scale We were knocked around by
a broad range of individuals and the agriculture sector inhibits the negative impact of foreign that, in the past, direct investment
Australian farming to be included drought, by foreign currency
organisations from superannuation capacity for external investment investment rules and engaging in agribusiness had not proved
part of a diversified portfolio was movements and just by volumes. It
and agricultural. and presents a need to develop with state and territory consistent with that.
"compelling". was a difficult investment. It didn't
The Inquiry into superannuation apparatus that allows super funds governments to assess land Having established there were
"Agriculture remains the last perform as well as what we would
investment in agriculture was to be able to compare agriculture tax arrangements affecting no regulatory or legislative barriers
big picture of the global economy have liked," said Mr Baird.
specifically tasked with finding to other sectors. investment. The Inquiry further affecting investment in agriculture,
that Australian superannuation Mr Baird also mentioned
out if there were any regulatory recommended the possibility the Inquiry report prioritised
funds haven't yet invested that pressure from regulators on
requirements stopping super funds of the Federal Government projects that enable agriculture
significant dollars into," Mr underperformance was creating Inquiry recommendations
successfully investing; whether or providing taxation offsets where and superannuation to begin
Anthony told the Inquiry. a need to focus on short-term The Inquiry's final report was
not the information super funds appropriate. speaking the same language and
However Mr Anthony outcomes. released on 12 December 2018 and
needed to invest in Australian 3. Ensuring the Australian forge investment opportunities that
said agricultural investment "If you have an investment that provided detail on its considerations
farming is available and adequate; Government engages with could benefit both sectors.
posed significant challenges doesn't perform for a period of about regulatory
and if there were any practical the Council of Australian If the Government can
for investment committees of time, there is pressure to get out," and practical
barriers to agri-investment. Government (COAG) as well assist the agriculture industry to
managed funds. "The sector is not he said. barriers. as agriculture peak bodies improve its data so it speaks to
well understood by Australian fund The regulators were clear in
to develop an information super investment teams, it may
trustees nor their asset advisers, their statements that members' ISA's Stephen
Anthony: Agriculture and promotional platform well be that the last big picture
who hold biased perceptions best interest must come first in any remains the last big for investing in Australian of Australian investment is finally
based on past failures," he said. investment considerations. picture for super funds
to invest in. agriculture. unlocked.
14 SUPERTALK – March 2019 SUPERTALK – March 2019 15
AIST 2018 Award winners
XXX
AIST AWARDS
XXX
1 2 1. Dolan Bourke and Stacey
Caffell from Cbus accepted
the first award of the night:
Best B2B Campaign, under
$40,000.
2. HESTA picked up an
impressive four awards
on the night: Best B2B
Campaign over $40,000;
Best Internal Comms
Campaign, under $40,000;
Best Member Facing
Project, FUM over $10bn
and the prestigious Platinum
Communications Award.
3. Mercy Super's Craig Keath
3 4 and Glenn Jenkins with the
fund's award for Best Direct
Mail Campaign, under
$40,000.
4. First State Super took out the
award for Best Direct Mail
Campaign, over $40,000.
5. Sunsuper's Fund of the Year
campaign won the award for
Best Integrated Campaign,
over $40,000.
6. Kim Farrant (left) accepted
VicSuper's award for Best
AIST CEO, Eva Scheerlinck opens proceedings at Corporate Reporting from
Melbourne's Metropolis Events. 5 6 AIST's Head of Advocacy,
Ailsa Goodwin.
AIST
Awards
2018
AIST's 11th annual Awards
for Excellence recognised the
achievements of the profit-to-member
super industry. The passion and
dedication of those working in the
sector shone through, with many
highlighting the hard work of their co-
workers in achieving better outcomes
for fund members.
7 8 9
Top left: Kane Perkinson accepting UniSuper's award for Best Digital Campaign,
over $40,000. Bottom left: Maria Martignoni (left) accepts Combined Super's award
for Best Digital Campaign, under $40,000 from AIST's Senior Manager, Media &
Communications, Janet de Silva. Top right: Clare Marlow from State Street presented the 7-8. Statewide Super and WA Super were joint winners of the award for Best Member Facing Project, FUM under $10bn.
Leader Development Scholarship, Outstanding Trustee Director to Legalsuper's Emma 9. Australian Catholic Superannuation and Retirement Fund staff with their award for Best Integrated Campaign, under $40,000.
Maiden (left). Bottom right: BUSSQ Building Super's digital overhaul earned the fund the
Best Internal Project, FUM under $10bn award.
16 SUPERTALK – March 2019 SUPERTALK – March 2019 17XXX
FEATURE STORY
FEATURE STORY
XXX
FEATURE
Super in a
changing
W
ITH A RECENT "The fund's negative
climate
GLOBAL report investment screen, which excludes
predicting that companies with more than 33 per
the impact of cent of their revenues derived from
global warming will be far greater coal mining, tar sands or coal-fired
than expected, the challenge of power, has added 10 basis points
managing climate change is only to the fund in the past four years,"
going to get bigger for Australian he says.
SuperTalk takes a look at how some funds are tackling super funds and other big LGS' investments have a carbon
both the opportunities and challenges of climate change. investors. footprint 25 per cent below that
According to the authors of of the MSCI World Index and the
a recent landmark report by the fund has the nation's first five-star
Story: Meredith Booth
UN Intergovernmental Panel on Green Star performance rating for a
Climate Change, global warming property portfolio.
could reach 1.5C as early as 2030, Additionally, Mr Hartnett – who
with temperature rises beyond this is a board member of the Australian
significantly worsening the risks of Council of Superannuation Investors
drought, floods, extreme heat and (ACSI) and the Investor Group on
poverty for hundreds of millions Climate Change (IGCC) – says
of people. active ownership by Australia's
Bill Hartnett is one who takes super funds will encourage
a strong view that super funds companies to declare their climate
should be prioritising climate risk and examine their own business
change action as part of their models relating to climate.
fiduciary duty. VicSuper is another fund that
"We are a fiduciary and has adopted a multi-pronged
this is clearly a fiduciary issue. approach to climate change.
At LGS it is about having this The fund's Portfolio Manager
array of approaches," says the – Responsible Investments, Kim
Local Government Super head Farrant, says the $21b fund was one
of responsible investment and of the first in Australia to measure
25-year veteran in ESG strategies. the greenhouse gas emissions
'We've long been saying we need intensity of its equity investments,
to have a policy framework out allowing it to meet its voluntary
there to minimise uncertainty." commitments as a signatory to
Mr Hartnett believes negative the Montreal Pledge. Signing this
and positive investment screens, pledge requires investors around
including green bonds, have the world to annually measure and
placed the $11 billion fund as publicly disclose their portfolio's
a leader of investment to limit carbon footprint.
climate change.
18 SUPERTALK – March 2019 SUPERTALK – March 2019 19XXX
FEATURE STORY
FEATURE STORY
XXX
Mr Major is now responsible
for HESTA's investment activities Climate Action 100+ This group of companies
in private markets, including was selected from a major
Climate Action 100+
debt and equity investments in global index (MSCI ACWI) that
is a five-year initiative to
the infrastructure, private equity, represents 85 per cent of global
engage systemically important
property, agriculture and social investable equity. The initial
greenhouse gas emitters and
impact sectors. 100 focus companies have the
other companies across the
"We are a foundation member highest combined direct and
global economy to drive the
of the Investor Group on Climate indirect emissions (emissions
clean energy transition and help
Change (IGCC) and support other associated with the use of their
achieve the goals of the Paris
local and international collaborative products). These initial 100 focus
Agreement.
initiatives focussed on climate companies – which include well-
With 289 investors to date
change," Mr Major says. known Australian names such as
from 29 countries managing
'Our investment strategies have BHPand Rio Tinto – represent
more than US$30 trillion in assets
also evolved from looking at niche up to two-thirds of annual
the group is asking companies
asset class strategies to now being global industrial greenhouse gas
to improve governance on
focussed on sustainability and low emissions, according to CDP.
climate change, curb emissions
carbon-themed investments across The initiative is delivered via
and strengthen climate-
a number of asset classes, including the Investor Group on Climate
related financial disclosures. In
listed equity, private equity, Change, which includes AIST
Investment managers are increasingly focussed on assessing the impact of climate change on infrastructure assets in their portfolios. December 2017, an initial list
infrastructure and property. and ACSI among its Australian
of 100 focus companies was
"For example, our investment members.
The fund also meets the For members who want a to track a broad market index. identified.
managers are now deeply focussed
challenge set by Victoria's socially conscious investment The fund aligns its equities
on assessing the impact of climate
equivalent TAKE2 Pledge. option, VicSuper takes action on portfolio energy mix with that
change on infrastructure assets in
"In 2018 we invested $1 billion climate change by not investing required to meet a 2C scenario,
their portfolios," he says.
in a new international equity in companies that hold fossil fuel based on the International Energy
Significantly, the fund's climate
customised carbon strategy reserves used for energy purposes Agency's (IEA) 2oC Energy
change policy requires it to exclude
designed to deliver a 70 per cent or whose principal business revenue Technology Roadmap.
new thermal coal opportunities and
reduction in carbon intensity and is derived from direct fossil fuel Over at HESTA, General
transportation across their entire A number of HESTA's 860,000
50 per cent reduction in fossil fuel activities. Manager Unlisted Assets, Andrew
portfolio. Many funds exclude fossil members have actively chosen
reserves exposure when compared
with its benchmark," Ms Farrant
Representing 25 per cent of
its international equities portfolio,
Major, says the fund's position as a
leader in addressing climate change
fuels from their 'sustainable option' 'We are a the fund's Eco Pool investment
says. the significant passive investment and the transition to a low carbon
but this applies across the entire
portfolio.
fiduciary and option, which invests in companies
and property that demonstrate
"As part of our approach to was developed specifically to meet economy was a factor that attracted
Like VicSuper, HESTA also this is clearly superior performance on a range
responsible investment, we invest VicSuper's requirements and aims him to work at HESTA in mid 2009.
in sustainable outcomes such as
maintains an active engagement a fiduciary of responsible investment criteria.
strategy on climate using the Mr Major says many larger
renewable energy and essential
services of groups like ACSI. issue' companies, whose businesses are
infrastructure, having recently
The fund's latest annual exposed to climate-related risks,
added investments in Ross River Climate risk reporting Similarly, super funds are
increasing their own transparency report notes the fund supported understand the critical nature of
Solar Farm, Finerge wind farms Recognising that climate
to their members and beginning engagement with 211 companies managing for climate risk and will
and Scandlines hybrid ferries." change has a material impact HESTA – a signatory to the
to report to TCFD. on the issue. This includes continue to respond to climate risk
on financial performance, engaging with Rio Tinto for a Montreal Pledge and a member and decarbonisation separately
The TCFD, which was
VicSuper also the international Task Force
on Climate-related Financial
launched in 2015 by G20 number of years regarding the of Climate Action 100+ network from government policy.
– also has recently invested in
supported 28 Disclosures (TCFD), urges
finance ministers and central
bank governors, has garnered
company's exposure to climate
change risk and transition to a low a company committed to clean
"A clear part of our fiduciary
responsibility to members is to
shareholder all listed companies to to
be transparent with their
support from 500 companies carbon economy. energy generation. ensure we invest in a manner that
resolutions relating shareholders on how they
with a combined market value of Rio Tinto published its first
climate change report in 2017
X-ELIO Energy is a leading
global developer and operator of
produces long-term sustainable
investment returns, with a positive
US$7.9 trillion.
to climate change. manage this risk. and also reported a 38 per cent photovoltaic plants to generate impact on society, the economy and
reduction in emissions since 2008. solar energy. the environment," says Mr Major.
20 SUPERTALK – March 2019 SUPERTALK – March 2019 21Collective action Davidson, said, "Our members have Company engagement
AI & DATA:
XXX
FEATURE STORY
RESEARCH
XXX
a legitimate need to price climate In 2018, ACSI targeted 16
on climate change risk into their investment decisions to companies across the materials,
Digitising the
ensure they are maximising long- insurance, transport and utilities
term returns to their beneficiaries. sectors for intensive engagement
As a vehicle for collective action, on climate change, but the
nest-egg experience
ACSI combines our members' organisation also engages with a
voices into a unified and influential much broader group of companies.
statement of investor expectations
on climate change." Voting advice
ACSI assists its members with Last year, ACSI provided
the management of climate risks voting advice to members on a
through an intensive, year-round record number of climate-related
Louise Davidson, ACSI CEO program of company engagement, shareholder resolutions. In each
voting advice, research and policy case, ACSI engaged directly with
More than 30 AIST funds are advocacy. the companies and proponents of
members of the Australian Council the resolutions.
of Superannuation Investors (ACSI),
a national body whose mission is
Last year, ACSI Research
to enhance shareholder value by provided voting ACSI's sustainability research
improving the environmental, social advice to members assesses the availability and quality
of climate-related disclosures by
and governance performance of
ASX listed companies. on a record number ASX200 companies. ACSI uses this
ACSI members believe that of climate-related data to identify trends over time
and target poor performers.
climate change represents a
material risk to the value of their
shareholder
Policy advocacy
portfolios. ACSI CEO, Louise resolutions. Investors need regulatory
certainty to deploy capital. ACSI
advocates for the development
of long-term policy certainty
on climate change, actively
participating in government,
parliamentary and other public
policy forums.
Ms Davidson said, 'We are also
Super funds are tapping into advancements in digital technology to enhance their connection with members and improve their experience with super.
mindful of the need to minimise
adverse impacts to workforces and
local economies as the transition to Super funds are tapping into advancements in digital technology to enhance their
a low carbon world occurs.' connection with members and improve the experience with super. Here’s what two leading
profit-to-member funds are doing in this space. Story by Tyrell Mills
`` Feedback
AIST is keen to profile what other
member funds are doing to address Peter Little, The rapid advancement of Peter Little, head of member
the challenges and opportunities of
climate change to include in the next Head of digital analytical capabilities has marketing communications at Cbus
issue of SuperTalk and our website. Member the potential to dramatically and Sam Harris, general manager
Please contact AIST's media manager, Marketing change the way super funds insights and customer experience
Janet de Silva at jdesilva@aist.asn.au
Communications communicate with their members. at HESTA provided the following
(Cbus) The ability to provide real time and insights about the approach of
bespoke data has precipitated a their respective funds to AI and
trend towards creating customer data.
Sam Harris,
‘journeys’ that are personalised and
General Manager
easily accessible.
– Insights and
Customer
Experience
(HESTA)
22 SUPERTALK – March 2019 SUPERTALK – March 2019 23You can also read
