Despite being a growing reservoir of funds under management, this critically important pool of capital is confronting mounting problems collating and disseminating key data in a timely manner.
The ratings house is pinning its growth strategy on a revamped methodology that increases the emphasis on governance to 25 per cent – a timely move considering APRA’s proposed reforms.
Another one bites the dust: NRMA fund to fold into Sunsuper
One of Australia’s oldest corporate super funds, the IAG & NRMA Superannuation Plan, is to outsource its investments and administration to Sunsuper. Ironically, the NRMA fund’s default option has outperformed that of Sunsuper for the last 10 years. And its fees look reasonable too.
The fund started life as a defined benefit fund for NRMA employees in 1937. It has about 15,000 members and just under $2 billion in assets under management. NRMA, the big NSW road-side assistance organisation and motorists’ lobbyist, outsourced its insurance arm to CGU, one of IAG’s insurance brands, in 2003 and changed the fund’s name a year later. IAG is the largest insurer in Australia and New Zealand.
The corporate loser in the deal is Mercer, which has been NRMA’s administrator for more than 10 years. Perhaps another irony is that Rainmaker awarded the IAG & NRMA fund the ‘best value insurance’ award in its Selecting Super awards for 2017. The IAG & NRMA fund has returned 7.6 per cent a year over the 10 years to December last for its former ‘growth’ fund, now it’s MySuper default, compared with Sunsuper’s 6.9 per cent for a comparable investment default.
David McClatchy, the fund’s chair and group CIO of IAG (Insurance Australia Group), said in a letter to members last week: “The Trustee of your superannuation fund… recently completed a strategic review to determine whether it was in the best interests of members to continue the plan as a standalone corporate superannuation fund.
“This was an open-minded inquiry, recognising that the plan has served members and their dependents well, but knowing that challenges lie ahead in an ever-changing legislative and governance environment.
“After an exhaustive review, the trustee has concluded that member interests will be better served by transitiopning to Sunsuper, a large multi-industry superannuation fund, rather than continuing the plan in its current form.”
He said the trustees were comfortable that Sunsuper could deliver high-quality services at scale.” Sunsuper has about 1.3 million members and $57 billion in assets under management. It has become particularly successful in winning the admin and investments business from smaller funds which have similarly folded in the past two years.
– G.B.
