Systemic risk in the superannuation system likely doesn’t stem from funds themselves, but from their service provider relationships. Regulators need to be thinking harder about where and how it arises – something they’re not necessarily well set up to do.
Big asset owners and managers are embracing the private markets as one avenue for growth, but the complexity that brings to portfolios means they also need to get a better view of what might be decades of siloed information.
Now Mercer goes down the member-directed platform route
Mercer is negotiating to install a member-directed platform for its Australian trusts, which account for the largest single group of its multi-manager funds under management globally, and is understood to have decided a shortlist of two providers.
The move follows the high-profile trend by big super funds such as AustralianSuper to introduce an SMSF-type structure for their high-balance members in an attempt to stem the drift away from industry funds and commercial mastertrusts and towards SMSFs. According to Tax Office figures, as much as $16 billion may have leached from big not-for-profit, as well as commercial, funds last year. The big funds are still growing, though: figures from research firm TriaInvestment Partners show they grew by $A42 billion last year (see separate report this newsletter).
The move by Mercer will allow several super fund administration clients to partake of the member-directed option. These include Media Super, EquipSuper, Non-Government Schools and Tasmania’s Retirement Benefit Fund. The three main Mercer trusts in Australia have about $20 billion in assets but the firm has much more under administration. It also operates smaller trusts in Europe.
The two providers in talks with Mercer are the FNZ/UBS joint venture, which was chosen by AustralianSuper, Telstra Super and HostPlus, and the retail offering from Macquarie Bank, which was chosen by CareSuper.
The Macquarie platform is an adaptation of the familiar Macquarie Wrap, usually involving shelf-space payments by managers and a less transparent fee structure than the wholesale services.
The recently announced outsourcing of the member administration of its smaller funds by Russell Investments to Australian Administration Services, part of the Link group, may also mean the Macquarie platform is available for other smaller funds through a previous arrangement.
