Super Review (October 2011)

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 F O R T H E S U P E R A N N U A T 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 R Y

The competitive fees being quoted by

some major retail funds may not be as

generous as they at first seem, according

to a Super Review roundtable.

Retail fees under scrutinyT 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 F O R T H E S U P E R A N N U A T 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 R Y

11 RETIREMENTWhat happens when the savingsstop?

For the latest news, visit superreview.com.au

14 SMSFsSMSFs grow in the face of adversity

16 ROUNDTABLEStronger Super: what does the future hold?

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COMPANY INDEX 2 NEWS 3 EDITORIAL 6 SMSFs 14 ROUNDTABLE 16 APPOINTMENTS 23 ROLLOVER 24

October 2011 Volume 25 - Issue 9

3 FUND MEMBERSHIPSlowing member growth now driving consolidation

By Mike Taylor

Just weeks before theAustralian PrudentialRegulation Authority

(APRA) released draft pru-dential standards covering su-perannuation funds, a SuperReview roundtable was toldhow easy it was for trusteesto obscure fees and costs.

In a discussion aroundwhether there should be morecompetition with respect todefault funds under modernawards, Sunsuper chief in-vestment officer David Hart-ley said if retail fund wereto be allowed to participate,they should be required tooffer greater transparency.

“If commercial operatorsare willing to operate on thesame profit margin as indus-try funds, then it’s probablyfair enough,” he said.

However, in response to asuggestion by former Invest-ment and Financial ServicesAssociation chief executiveRichard Gilbert that retailfunds could offer competitivedefault funds, Hartley sug-gested the quoted fee mightnot reflect total reality.

“That’s the quoted fee –there’s no requirement for atrustee of a superannuationfund in Australia to say how

much money that particularbody is taking out for the pur-poses of the trustee, and howmuch they’re taking out forrelated parties,” he said.

“And if you get to fee dis-closure which gives you thosenumbers, then fine. But I wasspeaking to someone aboutthis issue, and they saidthere’s all sorts of ways thatyou could effectively quotea zero fee and still make abucketload of money out ofthe whole system,” Hartleysaid.

“And they’re talking aboutvolume discounts on spot con-tracts; they’re talking about awhole bunch of differentthings that I’d never eventhought of,” he said. “Anduntil you can get to the bot-tom of how much you’re tak-ing – how much you’re rippingout of the system – then youdon’t really have a fair com-parison.”

Hartley told the roundtablethat he suspected “there’s awhole lot of people who arejust – their job is ‘How do Ihide these fees? How do Imake this thing profitablewithout looking as if I’m tak-ing a lot of money out?’.

“So if you can get to thebottom of that and find outexactly how much the trustee

is taking out, the responsibleentity is taking out for them-selves, and for the related en-tities, then I think you’ve gota fair comparison, then you’vegot a basis for which thosecommercial guys can operateas a default fund,” he said.

Asked whether what he wassaying that was Product Dis-closure Statements could notbe accepted as reflecting re-ality, Hartley said it was pos-sible to arrange investmentsin a fund to enable the quot-ing of a negative fee.

“I could arrange our in-vestments in our particularfund ... so that I could quotea negative fee and have ex-actly the same investments asI’ve got now, under the cur-rent rules,” he said. “It’sridiculous.”

Extended roundtable cov-erage starts on page 16. SR

“There’s norequirement for a

trustee of asuperannuation fundin Australia to sayhow much money

that particular bodyis taking out for the

purposes of thetrustee.”- David Hartley

David Hartley

MANDATESReceived by Type of mandate Issued by Amount

Fidelity Custody AustralianSuper $525 million

Hanover Life Re Insurance Cbus N/A

Aubrey Capital Management Custody Investor Solutions N/A

MLC Business Super Custody Clark Equipment Australia Group $15 million

Mercer Asset consulting Sunsuper N/A

2 PAGE TWO www.superreview.com.au

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APRA releases proposed prudential standards

OCTOBER 2011 * SUPERREVIEW

By Tim Stewart

THE Australian Prudential RegulationAuthority (APRA) has released a dis-cussion paper detailing its proposed pru-dential standards for the superannuationindustry.

Currently, APRA can only give super-annuation trustees guidance on how tocomply with the Superannuation Indus-try (Supervision) Act 1993 (SIS Act).The new powers granted to APRA willallow the regulator to issue its own pru-dential standards for the superannuationindustry – something it already doesfor the banking and insurance industries.

Minter Ellisonprincipal Maged Girgissaid the proposals in the discussion paperweren’t terribly onerous in their currentform. He said they were not prescriptive,and mostly reflected the SIS Act. How-ever, he added that it was the potential for

APRA to change the standards around inthe future without the usual checks andbalances that concerned him most.

“It’s the potential of the APRA stan-dards that is probably scarier than whatthey actually are on day one. During pe-riods of economic crisis, you could haveshort-term standards that will apply with-out APRA having to go through the par-liament,” Girgis said.

The discussion paper includes a re-quirement for funds to put a transitionplan into place for transferring membersto MySuper funds. Additionally, the def-inition of an ‘independent director’ willbe tightened, and Board audit commit-tees will require a different chair thanthe chair of the Board. There will be noset maximum and minimum operationalrisk reserves under the APRA standards– instead, operational risk reserves willbe based on the operational exposure

of each fund and its individual risks.Super funds will also have to report oncea year on the adequacy of their scale.

Australian Institute of Superannu-ation Trustees Fiona Reynolds wel-comed the APRA standards, calling them“significant and wide ranging”. The in-dustry would need to further consult with

APRA to hammer out the finer detailsof the standards, but on the whole, thestandards filled in the gaps left byStronger Super, she said.

“Whilst many funds have high levels ofgovernance, the reforms proposed in thediscussion paper will leave funds in nodoubt about where the bar is being set interms of running the super funds of thefuture in MySuper,” Reynolds said.

APRA deputy chairman Ross Jonessaid the APRA standards would strength-en the superannuation system and pro-vide clear benefits to members.

“The establishment of prudential stan-dards in superannuation will not changethe fact that the primary responsibility forprudent management of superannuationfunds rests with the trustees,” Jones said.

Submissions to APRA on the discus-sion paper will be open until 23 Decem-ber 2011. SR

Slowing member growth driving consolidationTHE maturity of the super-annuation system when itcomes to membership is thedriving factor behind the con-solidation in the industry, ac-cording to REST chief exec-utive Damian Hill.

Considering there are justover two accounts for every per-son, the industry is almost “over-ripe” in terms of membership,he said.

However, he added the sys-tem was immature in terms ofassets, because Australians hadonly been contributing 9 per

cent of their income to their su-perannuation for the past 10years. He stressed the need toincrease the superannuationguarantee to 12 per cent to en-sure Australians had enough fortheir retirement.

“Asset growth and contribu-tions should grow going forward,but membership is not goingto grow at anywhere near therate it has. Indeed, many fundshave zero or negative membergrowth,” Hill said.

The decrease in membergrowth is putting pressure on

costs and revenues, which ex-plains the consolidation the in-dustry has seen in recent years,he said.

“When account balances rise,you have a huge increase in en-gagement. And what do engagedmembers want? More service.So the whole revenue/costmodel is coming under strain– regardless of the regulatorychallenge,” Hill said.

The industry was effectivelydealing with the challenge of ma-turing membership by looking tomergers and economies of scale,

he said. Most of the mergers atthe moment were between small-er funds looking to become ‘medi-um’ funds, he added.

When it came to mergers forREST, Hill said it was not a toppriority for the fund – but hewas open to the idea if it couldadd capabilities.

“That’s not to say we couldn’tget more scale. We can be moreselective in our process. Wekeep an open mind to mergersand acquisitions out there, butwe want to be fairly strategicabout what we do,” he said. SR

www.superreview.com.au NEWS 3

Managed futures play diversifying roleSELECTING investments on thebasis of fundamental forecast-ing can lead to high levels of cor-relation in a portfolio – some-thing that exposure to managedfutures can mitigate, accordingto FRM Australia managing di-rector Richard Keary.

Because fundamental fore-casting is based upon consensusnumbers, it tends to lead to a“herding” mentality and doesn’tleave the investor with muchscope to diversify, Keary said.

Managers who trade in fu-tures contracts (also known ascommodity trading advisors, orCTAs) use technical analysis toidentify trends and benefit frommarket volatility, he added.

“The literature has lots of ex-amples showing that when mar-kets fall, owning some CTA ex-posure helps mitigate thelosses,” Keary said.

The offshore FRM Sigma Fundhas been in operation since 2005,and has been available to whole-

sale investors in Australia andNew Zealand as a unit trust forjust over a year. The offshore fundreturned 40 per cent during 2008,during a period when marketswere down 40 per cent, Kearysaid. The Australian unit trustgenerated a return of 12.89 percent over the past year, net ofall fees and expenses.

“Adding trend following ormomentum-based decision-making is a simple way to di-versify the risks associated with

selecting investments usingforecasting alone,” he said.

“Instead of trying to forecasttrends using fundamental fore-casting, CTAs identify and fol-low trends using proprietarycomputer modelling to max-imise exposure to the trends,”Keary added.

The FRM Sigma Fund dif-fered from many of the unittrusts that were frozen duringthe global financial crisis be-cause it allowed weekly re-

demptions, which reflected theliquidity of the underlying off-shore fund, Keary said. SR

Fiona Reynolds

Damian Hill

Richard Keary

AustralianSuper doubles Fidelity mandateBy Tim Stewart

THE big industry fund Australian-Superhas added $525 million to Fi-delity’s Australianequities mandate,bringing it to around $1 billion.

AustralianSuper chief invest-ment officer Mark Delaney saidFidelity had demonstrated solid

and consistent stock selectionskills, making the fund managera good fit for the super fund’s port-folio configuration.

“We have recently added anoth-er $500 million to Fidelity, to taketheir mandate to about $1 billion– which is roughly the same size asthe other three large caps Aus-

tralian equities managers in theportfolio,” Delaney said.

AustralianSuper has a disci-plined investment process, and thefund monitors and changes keyvariables in its portfolios as re-quired, he added.

“Many factors are taken into ac-count when selecting investment

managers, including the strengthof the company, its managementstructure, ownership and the ex-perience of its investment team,the process they use, their trackrecords and whether the manag-er complements AustralianSuper’sother investment managers,” De-laney said. SR

SG charge survivesHigh CourtTHE Government’ssuper guarantee charge(SGC) has held up tothe scrutiny of the HighCourt, with the failure ofa case launched by RoyMorgan Research.

The SGC is effectivelythe Government’s onlymethod of enforcing thesuper guarantee. It givesthe Australian TaxationOffice (ATO) the powerto collect late employercontributions – alongwith interest calculat-ed at 10 per cent, whichis paid to the employee.

Roy Morgan Researchargued that the ATO didnot have the constitu-tional power to collect alevy for the “private anddirect benefit” of em-ployees, as opposed tothe collection of moneyfor “public purposes”.

But the High Courtjudges ruled unani-mously that the SGCwas a tax, and threwthe case out.

Assistant Treasurerand Minister for Finan-cial Services and Super-annuation Bill Shortensaid he was pleased theSGC would remain inplace to ensure employ-ees were compensatedappropriately if their em-ployer was late payingtheir contributions.

“The SGC plays an im-portant role in the in-tegrity of our superan-nuation system, and I ampleased to see it will bemaintained under thisHigh Court decision,”Shorten said. SR


4 NEWS www.superreview.com.au

Mark Delaney

QIC Global Real Estate(QIC GRE) has announcedthe completion of a $1.72billion capital raising for itsQIC Property Fund (QPF).

QIC GRE managing di-rector Robert Carter saidthe 18-month-long effortwas one of the largest cap-ital raisings by an Australianunlisted property fund.

“The recapitalisation hasincreased the number of in-vestors in the QPF, whichnow comprises a mix of do-mestic and international in-vestors representing super-annuation, insurance andsovereign funds,” Carter said.

QPF is an open-endedwholesale property fund,and as of 30 June 2011 ithad $5.5 billion in fundsunder management. Thefund currently owns 10 re-gional shopping centres andfour central business dis-trict buildings.

The capital raising waspartly a move by existing in-vestors to reposition theirportfolios, Carter said.

“QIC Global Real Estateclosely aligns our corestrategic functions with ourclients’ investment objec-tives, enabling our businessmodel to respond quicklyand effectively to new op-portunities,” he said.

QIC GRE has a “significantdevelopment pipeline” whichcould see future capital rais-ings in the short to mediumterm, Carter added. SR

Proposed carbon tax relief will help pre-retireesBy Tim Stewart

THErelief measures contained in the Gov-ernment’s proposed carbon tax legislationcould save pension investors hundredsof dollars, according to analysis by MLCTechnical Services.

Under the current rules, people in the55-59 age group can receive pension pay-ments of up to $48,158 before they have to

pay income tax. If the Clean Energy (In-come Tax Rates Amendments) Bill 2011 isintroduced, that threshold will rise to$49,753 from 1 July 2012 and then $50,189from 1 July 2015.

As a result, pension investors aged be-tween 55 and 59 look set to receive anadditional $1,500 in taxable pension in-come, tax-free, from 1 July 2012 – a tax sav-ing of around $280 after taking the 15 per

cent pension tax offset into account, ac-cording to MLC.

And from 1 July 2015, they are likelyto be eligible for an extra $2,000 in tax-freeincome as compared the current year, sav-ing them approximately $360.

MLC Technical Services head GemmaDale said the finding was great news forpension investors in the 55-59 age brack-et, including those who had started a

transition to retirement pension.“This means they can draw more income,

if required, from their pension investmentwithout paying any tax,” said Dale.

“This makes using super money to starta pension investment even more attrac-tive, given you can also receive unlimitedtax-free income payments at age 60 or over,as well as possible Centrelink incometest concessions,” she added. SR

www.superreview.com.au NEWS 5


QIC property fundraises $1.72 billion

Stronger Super or a work in progress?

The Federal Governmentlast month finally deliveredthe final iteration of its

Stronger Super policy propos-al, but it did not succeed in de-livering the certainty craved byso many of the Australians re-lying on superannuation to pro-vide the underpinning of a com-fortable retirement.

It is a measure of StrongerSuper as a policy that none ofthe major stakeholders havesufficiently embraced its con-tents such that they havestopped their bickering orcalled a halt to their politicallobbying.

It was obvious even beforeAssistant Treasurer Bill Short-en had pre-briefed the keystakeholders on the ultimateshape of his Stronger Super

pronouncements that for them,the devil would be in the detailof the legislation and then itsultimate regulatory delivery.

For this reason, the onlycertainty to emerge fromStronger Super is the uncer-tainty that has been borne ofhow quickly the legislation ac-tually moves through theHouse of Representatives andSenate, and is then rolled outinto the industry.

The reality for members ofsuperannuation funds and self-managed superannuation fundtrustees is that they are lookingat implementation dates ex-tending over three years, withthe only certainty being that afederal election will intervene.

And if the implementationtimetable of Stronger Superis not of itself an issue, thenthere exists the Government’spromise to refer the vexedissue of default funds undermodern awards to the Pro-ductivity Commission.

The degree to which Short-en’s Stronger Super announce-ment in mid-September did notrepresent the last word on thefinal shape of superannuation

policy and legislation was evi-denced by the degree to whichstakeholders signalled their in-tention to keep lobbying aroundthe detail.

For its part, the IndustrySuper Network indicated it wasless than happy with key ele-ments of the package, saying itwould be encouraging the Gov-ernment and regulators to re-move the proposed $10,000threshold for the consolidationof account balances when it isdue to increase in 2014.

As well, it said the Govern-ment needed to determine thefinal policy parameters formulti-pricing arrangements andto address employees’ savingsbeing flipped into more expen-sive products.

Irrespective of the ap-proaches being pursued by themajor stakeholders, there ismuch in the Stronger Superpolicy which deserves to be im-plemented and to carry bipar-tisan support when the legisla-tion is ultimately debated in theParliament.

Foremost among the policypositives is SuperStream –something that has already

earned the backing of almostall the major players, includingthe Opposition spokesman onFinancial Services, SenatorMathias Cormann.

The provision of more defin-itive superannuation perform-ance data by the AustralianPrudential Regulation Author-ity has also earned the supportof a cross-section of the indus-try, notwithstanding the regu-lator’s less than stellar per-formance to meet a similarrequest from the Governmentmore than two years ago.

However, MySuper is less cer-tain of bipartisan support in theHouse of Representatives in cir-cumstances where the Opposi-tion has persistently referred tothe Government’s failure torefer default funds under mod-ern awards to the Productivi-ty Commission.

The Opposition has indicat-ed it believes considerable in-consistency exists with respectto MySuper being implement-ed in the absence of the Pro-ductivity Commission ad-dressing a perceived industryfund monopoly in relation todefault funds under modernawards.

As well, Cormann has sig-nalled that the Coalition mayyet try to impose amendmentson the underlying StrongerSuper legislation to imposestronger corporate governancerequirements on superannua-tion funds, particularly with

respect to the holding of mul-tiple trustee-directorships.

As the roundtable publishedin this edition of Super Reviewhas underlined, there exists agrowing body of support forsuperannuation fund trusteeboards to be held to the samestandards of corporate gover-nance as the boards of pub-licly-listed companies. Fur-ther, a majority of theroundtable participantsagreed with the contentionthat superannuation fundmembers should be grantedthe right to vote on major is-sues such as fund amalgama-tions, and possibly the elec-tion of trustee boards.

It is clear that whatever el-ements of Stronger Supermake their way through thecurrent Parliament, they willnot encompass the questionsof fund governance raised bythe Cooper Review and em-braced by the Opposition.

There will be those whoargue that the Coalition’s sup-port for a higher standard ofcorporate governance is owedto its belief that some signif-icant personalities within theindustry fund movement holdmultiple directorships ontrustee boards. However, ifthe superannuation guaran-tee is to be lifted to 12 percent, it is incumbent on theGovernment to impose a com-mensurate increase in stan-dards of governance. SR

There is much to recommend the core contents of the

Government’s Stronger Super policy initiative, but it falls

far short of delivering the certainty many fund members

have been seeking.

Mike Taylor

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6 EDITORIAL www.superreview.com.au

Average Net DistributionPeriod ending March '112,300

Making the transition from theaccumulation phase of super-annuation to the de-accumu-

lation phase is a challenge that needsto be met with more than just Gov-ernment regulation, according toMetlife senior vice-president and be-havioural economics expert JosephJordan.

Jordan, who addressed last August’sFinancial Services Council annualconference on the Gold Coast, told

Super Review that the financial serv-ices industry could not rely on gov-ernments to make things happen, butthey had to engage more appropriatelywith clients.

“People have to become more self-educated and need to learn how tomanage an income stream,” he said.

Jordan’s views are expressed in a po-sition paper developed in associa-tion with other Metlife experts, DanWeinberger (Retirement Incomes

Strategies) and Joel Franks (Behav-ioural Finance Strategies).

The position paper said that foryears investors had based most of theirfinancial decisions on asset accumu-lation models, with savings and in-vestments being based largely on ananalytical process driven by historicalperformance and fund holding analy-sis in the form of some basic investingprinciples – dollar cost averaging,diversification and rebalancing.

“This set of tools and experiencesdid little to help clients understandthat some day it will all have to be con-verted into a lifestyle sustaining re-tirement income that needs to lastas long as their retirement may last,”it said.

“Armed with a wealth of knowledgeand experience on how to save money,retirees stand on the precipice of therest of their lives with incomplete fi-nancial knowledge to weather the newchallenges they will face during re-tirement,” the paper said.

For his part, Jordan said clients tend-ed to spend too much time utilising themore rational left side of the brain whenmaking financial decisions rather thanthe more emotive right hand side of thebrain, and it was the role of advisersto help clients use both sides of thebrain and to manage behaviour.

He said that understanding the needto help clients engage both sides of thebrain and become more self-directedcould help shape product design.

Jordan and the other position paperauthors claim “implementing behav-ioural approaches that accommodatethe emotional elements in client de-cision-making opens up new ways toserve clients more fully”.

They point to the fact that financialinstitutions have to accept that as theyenter retirement, retirees become lessan investor and more their own in-come provider.

“Before they can make educated

decisions about retirement income,they need to comprehend the scopeand consequences represented by theproblem as reflected in the way weframe the information we provide,” theposition paper said.

The position paper pointed to re-search conducted in the US whichshowed that, given the choice, retireeswould rather have predictable and se-cure incomes in retirement even itmeant accepting a slightly reducedlifestyle.

It concluded on the note that lastingclient relationships would rely on en-gaging clients about the new retirementrisk and help them participate in thedecision-making process that madethem feel better about the retirementincome options they choose.

“You cannot wait for your clientsto ask questions about concepts theywere not taught to think about,” it said.

Referring to studies conducted inboth the US and the United Kingdom,the Metlife paper said that while peo-ple could understand the differencebetween growing assets and gener-ating income, they might not under-stand how much income they wouldactually need or the impact of the newretirement risks. SR

With many superannuation funds and financial institutions adding retirement incomes products to their

offerings, MIKE TAYLOR writes that new Metlife research urges a need to close the knowledge gap.

Educate to accumulate: Metlife


8 EDUCATION www.superreview.com.au

“People have to becomemore self-educated and

need to learn how tomanage an

income stream.”- Joseph Jordan

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www.superreview.com.au RETIREMENT 11


What happens when the savings stop?

Though Australia may havehad the superannuationguarantee in some form

since 1992, the acknowledgedreality is that it is only now see-ing the first wave of retireesto have benefited from that sav-ings regime.

Within what is yet an immature system, the super in-dustry’s focus has been accumulation, but according toTony Hildyard, country head,New Zealand for PIMCO, thatfocus must take the next stepand turn to supporting super-annuants during retirement.

“As things stand we’ve had 20years of compulsory savings,and over that period you real-ly saw corporate and othersuper funds really not want todeal with the retiree,” he said.“They moved everything tomember choice and I think theywere quite happy to see peopletake their money when they re-tired so that they could justfocus on the accumulation role.

“What’s happening now, ofcourse, is that you’re getting thisbig demographic bubble that’sgetting close to retirement andthere’s been a realisation thatthe focus has, to this point, beenjust on accumulation,” Hildyardcontinued. “That same reali-sation’s occurring for retireesas well and they’re seeing thatstaying in a super fund with thecurrent offerings is not ideal.

“Retirees are risk averse, theywant some income certainty,they want control of their assetsand they’re very frightened ofrunning out of money andtherein lies the challenge.”

Commenting on the currentofferings alluded to by Hildyard

and what makes them less thanideal, Andrew Boal, convenor ofthe Superannuation and Em-ployee Benefits Practice Com-mittee at the Institute of Ac-tuaries of Australia, says thereare approximately 5.5 millionAustralians aged between 45and 64 who will be reaching65 in the next 20 years.

“So that’s a massive tidalwave of baby boomers aboutto reach that critical point intheir life,” he says. “Now as towhat’s happening out there atthe moment, we had a look at60 funds not long ago and theaverage asset allocation fortheir accumulation assets, wasabout 73 per cent in growth as-sets but of those, only 43 funds

had a default option for post-re-tirement.

“The rest either didn’t offeranything or at least required themembers to make an active de-cision to do something,” Boalcontinued. “And of those 43 thathad a default post-retirementoption, two of them defaultedto cash and four of them de-faulted to something more con-servative but the rest basical-ly didn’t make any change.

“Predominantly, most fundsthat have a default option in re-tirement are still using the samedefault asset allocation as priorto retirement, and while thatmay or may not be the rightthing, it’s a statement of wherethings are at the moment.”

Looking at not just the superindustry but also at what isbeing offered by a number oflarge financial services institu-tions, Dr David Knox, seniorpartner at Mercer, said that themost popular product out therewas probably the account-basedor allocated pension.

“So that’s a very flexible prod-uct for the retiree. It has a lotof advantages to it but the majordisadvantage is that it leaves allthe risk with the retired personor household, both longevityrisk and investment risk,” hesaid. “So we’re starting to seethe development of some otherproducts where the provider

picks up some of those risks.“The most obvious one is the

term annuity type product,which Challenger is sellingquite a lot of,” Dr Knox contin-ued. “And that’s really a fixed in-terest product where you offeran income for a period of threeyears, five years, 10 years orwhatever but there’s no longevi-ty protection.

“It’s an annuity but it’s onlyfor a fixed term and what Chal-lenger and the other providerswould be doing is trying tomatch that liability by investingin bonds and other types offixed interest products, there-by reducing their risk.”

Dr Knox said that the thirdtype of product available, and onewhich was gradually developing,was the variable annuity.

“Again, it can be a flexibleproduct where the provider of-fers some investment protec-tion but also some longevity risk

protection to the investor,” hesaid. “By and large, these prod-ucts haven’t yet been very suc-cessful in the Australian mar-ket but I think there are acouple of reasons for that.

“One, they’re fairly compli-cated. Most retirees don’t un-derstand how these risks areprotected and that’s under-standable because realistically,I can’t protect your investmentswithout a fairly complex set ofhedges and other assets in thebackground,” Dr Knox contin-ued. “And the other reason isthat longevity protection is notyet well understood in the Aus-tralian market.

“So when you put those twothings together in the one prod-uct, for reasons that are un-derstandable it appears ex-pensive and individuals aresaying as much.”

Yet according to PaulineVamos, CEO of the Associationof Superannuation Funds ofAustralia (ASFA), the retire-ment income options cur-rently available have issuesthat go well beyond price. ForVamos, the SuperannuationIndustry Supervision (SIS)Act and the Taxation Act, intheir current forms, are themost significant hurdles – andhurdles that must be over-come before any retirementincome products are likely togain traction.

“At the moment, because ofrestrictions in SIS, you can onlyreally have allocated pensionsor annuities,” she said. “Andthen you’ve got issues with cap-ital requirements and you’ve gotissues with the taxation treat-ment of annuities.

“So the first step is to removesome of these and then you’llstart to get some innovationin the area,” continued Vamos.“That’s number one.”

☞ Continued on page 12

The focus of the Australian superannuation industry over the past two

decades has been mostly on accumulation but, as DAMON TAYLOR reports,

super funds are increasingly examining their role in the retirement phase.

David Knox

Giving specific examples ofthose hurdles, Boal said that cur-rent SIS regulations really onlytook into account two types of in-come products in retirement.

“One is an account-basedpension, like an allocated pen-sion, and the other is an an-nuity or an immediate life in-come stream that starts payingtomorrow,” he said. “But ifyou’ve got a product that does-n’t actually pay anything formaybe 20 years, like a deferredannuity, that doesn’t really fitany of the current definitions.

“And the other thing is thatin the Tax Act, because [theproduct] is not drawing an in-come immediately, it’s treatedas though it’s still in accumu-lation mode, and as a result theinvestment income on the in-vestments supporting the an-nuity are taxed at 15 per cent,rather than tax-free like anyother post-retirement product,”Boal added.

According to Boal, there is def-inite room for the Governmentto provide both the super in-dustry and wider financial serv-ices industry with impetus fordeveloping more attractive re-tirement income products.

“But the SIS and Tax Acts arejust the start,” he said. “On topof that, when product providersare trying to develop new prod-ucts, and we’ve seen new prod-ucts being developed by com-panies like OnePath andMacquarie and Challenger,they’ve all had a go at innovat-ing product design in this area.

“But in coming up with newproducts, you actually have todeal with the Tax Office, you’vegot to deal with APRA (the Aus-tralian Prudential RegulationAuthority), you’ve got to dealwith ASIC (the Australian Se-curities and Investments Com-mission), you’ve got to deal with

Centrelink because differentproducts in retirement aretreated in different ways foraged care and social secu-rity rules,” Boal continued.“So you’ve got to work out thedesign of your product andnegotiate with each of thosefour regulators about howthe product will be treatedand what the tax implica-tions will be.

“It’s a very complex and dif-ficult area for product innova-tion, so if we could simplify theprocess for new product de-velopment in this space, it willonly be to the benefit of the in-dustry as a whole.”

Alternatively, Hildyard saidthat while government inter-vention and legislative change

would certainly assist the de-velopment of retirement in-come products, there was a ten-dency for people to look to thegovernment and simply hope forsomething.

“I know some of the insur-ance companies, for instance,are sitting there saying ‘shouldwe or shouldn’t we get intothis?’” he said. “They’re askingthemselves whether there’s areal demand there and sayingthat if the government makes itcompulsory, then they’ll jumpinto it.

“And that sort of mentalitycomes back to cost – but it’s alla bit chicken and egg,” Hildyardadded. “At the end of the day,its incredibly important for Aus-tralia to continue its prosperity

and to look after these retireesbecause otherwise people aren’tgoing to have the money thatthey needed in retirement andthey’re going to be falling backon the pension and variousother things.

“We do need a solutionthough, so while the industrymight welcome leadership fromthe Government, in the interimI don’t think we can sit here andwait for it.”

Clearly, whether the impetusis to be provided by governmentor the wider superannuationmarketplace, the developmentof retirement income productswill be interesting to watch. Andaccording to Vamos, all neces-sary stakeholders are on boardand initial development is un-derway, so from here it shouldjust be a matter of time.

“I think the conversationshave been had and we’re allpretty much of the same view,”she said. “When you look at thetax forum, when you look atsome of the Henry submissions,when you look at our pre-budg-et and other submissions, weknow what to do.

“The bottom line is thatthere’s been so much on the leg-islative agenda that the gov-ernment hasn’t turned its mindto this because it just hasn’tbeen pressing,” Vamos contin-ued. “But now that they’ve doneStronger Super and the Future

of Financial Advice Reforms,now they’re starting to turntheir minds to it and that’s whywe’ve seen it being a topic of dis-cussion on the superannuationadvisory council and a topic ofdiscussion on the tax forum.”

Also looking to the future andto what products would bebrought to the table, Hildyardpredicted that different fundsand providers would come upwith different solutions.

“So the funds with very highaverage age are going to have alot more focus on this than thefunds with much more broad-ly spread demographics,” hesaid. “And the solutions forfunds with savers with very highbalances are likely to be dif-ferent too.

“So if you’ve got a fairly olddemographic in your fund withhigh balances, you’re probablygoing to lean towards some in-come solutions and not worrytoo much about a guarantee,”Hildyard continued. “On theother hand, if you’ve got a verybroad membership with a lot ofyoung ones and lower balances,you’re probably going to con-tinue what you’re doing at themoment.”

Hildyard added that he ex-pected the Australian marketwould evolve to the same sortof solutions that were alreadyin evidence overseas.

“We are, however, in a uniqueposition where we’ve got thesebig super funds and they’re notindividual savings schemes likeyou see in the United Stateswith the 401(k)s and such, andas a consequence you’re in a po-sition where you can build someof these products,” he said. “AndI think long term we will evolveto some kind of income productwith an option to guaranteeyour income via some kind oflife policy or longevity policy.“We just need someone to makethat first move.” SR

What happens when the savings stop?


12 RETIREMENT www.superreview.com.au

Continued from page 11 ☞

Pauline Vamos

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14 SMSFs www.superreview.com.au

Whether you’re a partici-pant in the self-managedsuper fund (SMSF)sec-

tor of superannuation or mere-ly an observer, it has becomeabundantly clear that this is asegment of the super industryto be reckoned with.

The growth of SMSFs both interms of funds under manage-ment and total number of fundshas been beyond impressive andfor Andrea Slattery, Chief Ex-ecutive Officer of the Self-Man-aged Super Fund Professionals’Association of Australia (SPAA),it has been for three reasons.

“One – and every survey hassupported this – is that peo-ple who have control over otheraspects of their lives want tohave control over their savingsand retirement plans as well,”she said. “And this is true nomatter what age you are.

“The second aspect is invest-ment flexibility,” Slattery con-tinued. “So the ability for SMSFsto be able to tailor to your needs,your interests, your ability to getinformation and advice andmake your own decisions is alla very important part of what anSMSF is all about.”

And the final reason, ac-cording to Slattery, requires abit of a history lesson.

“So when SMSFs first started,they were really for people whohad small businesses or for pri-mary producers so that theycould have the capacity to savefor their own retirement as well,”she said. “But 10 years ago, therewere half a million small busi-nesses in Australia whereas nowthere’s nearly 1.8 million.

“That’s a lot of growth in peo-ple who are servicing the fi-nancial services industry andwho are familiar and cognisantwith what an SMSF is all about,”Slattery added. “So I thinkSMSF growth has been a resultof an increase in understand-ing, an increase in educationand an increase in specialisedadvice to the point where peo-ple fully understand that this isa viable and attractive option.”

Adding her own perspectiveto the super industry develop-ments which have placed self-managed super funds in the po-sition they now find themselvesin, Pauline Vamos, CEO of theAssociation of SuperannuationFunds of Australia (ASFA), said

that the role of accountantscould not be underestimated.

“The ability of a person’s ac-countant to setup a self-managedfund for them when they’re de-livering tax advice has beensomething that’s allowed self-managed funds to be set up botheasily and quickly,” she said.“Then with an ageing population

and growing account balances,that again has meant that peo-ple have wanted more control.

“And unfortunately, I thinkit’s also become a trendy thingto have.”

But trendy or not, one of thebiggest indications of the grow-ing weight and momentum ofthe SMSF sector is the fact thata number of large financial serv-ices institutions are showing aninterest in getting their ownpiece of the SMSF pie.

And for Slattery, it is evidencethat the SMSF record is slow-ly being set straight.

“In the past, I think there wasa lot of anecdotal informationabout the SMSF sector whichsimply wasn’t correct,” she said.“But through the Cooper Re-view, this sector is now ac-knowledged as being well func-tioning and well performing.

“So I think what’s happened isthat with the advent of peoplelike SPAA, [and with] specialistsin the market and increased ed-ucation, more and more peopleare aware that this is a sectorof the super industry which in-vests back into the market.”

According to Slattery, insti-tutions have also started to re-alise that SMSF trustees,whether across the board orin specific aspects of their serv-ice offering, represent a sig-nificant portion of their exist-ing client base.

“But beyond that, Australia’ssuperannuation market is grow-ing exponentially,” she said.“The super industry’s fundsunder management are at $1.3trillion or thereabouts at the

moment and they’ve grown tothat point from about $350 bil-lion eight to 10 years ago.

“At that time, SMSFs repre-sented a 14 to 15 per cent mar-ket share whereas they’re now 32per cent,” Slattery continued. “In-dustry funds were around about7 or 8 per cent and now they’re18 per cent. Retail funds were atabout 48 per cent where they’renow approximately 28 per cent.”

But for Slattery, the pertinentpoint is that even where mar-ket share has dropped, 28 percent of $1.3 trillion is still a greatdeal more than 48 per cent of$350 billion.

“All sectors have experiencedgrowth and yet nobody reallylooks at it that way,” she said.“They look at who’s got theirpiece of the pie when, in actu-al fact, we should be all work-ing together because thanks tocompulsion, everybody’s goingto benefit.”

Providing a counterpoint toSlattery’s position, Graeme Col-ley, superannuation strategy

manager for OnePath, said thatwhile he agreed that self-man-aged super funds had un-doubtedly become an integralpart of the superannuation mar-ket, he was less convinced thatthe sector would or could beseen as anything but a threat toindustry or retail funds.

“The reason I say that is thatwe continue to see productscome up which are in straightcompetition with self-managedfunds,” he said. “I know, for in-stance, that at one of the recentmaster funds conferences,Aussie Super was talking aboutthe fact that they were buildinga fairly cheap platform in whichclients would get access to awhole range of managed fundsand direct share investmentand cash.

“And you have to see that asbeing in direct competition withself-managed funds,” Colley con-tinued. “So how that gets pro-moted and how people acceptthat as an alternative to self-man-aged funds will be interesting,

The rise and rise of self-managed superannuation funds in

Australia has often been fuelled by periods of market

adversity and, as DAMON TAYLOR reports, there is no

sign of that trend changing any time soon.

SMSFs grow amid adversity

Andrea Slattery

www.superreview.com.au SMSFs 15


but I can’t see the bigger fundsseeing self-managed funds asanything but a threat for sometime yet.”

Of course, despite the strongposition the SMSF sector findsitself in, the Super System Re-view has indicated that there isyet a bit of tweaking at theedges to take place.

First on the list is serviceprovider professionalism andcompetency and, according toVamos, such initiatives are a time-ly and significant step forward.

“The ASFA position has al-ways been that this is an im-portant sector, we recognisethat,” she said. “But the gover-nance around it must reflect thenew scale of that sector andso we support the measuresthat have been suggested in theGovernment’s response to theCooper Review.

“We think the standards ofauditors should be raised, thatthe accountants’ exemptionshould go, that transactions in-volving related parties should

be on-market and that valua-tions should be real-time mar-ket valuations.”

Also indicating her approvalof the Super System Review’srecommendations, Slattery saidthat SPAA fully supported rais-ing SMSF service provider com-petency, accrediting people toat least an undergraduate levelof experience and having spe-cialists in the market that con-sumers could seek out to get theright kind of advice.

“It’s vital that people con-ducting business in this sec-tor understand it, and have theknowledge and competency toprovide that advice,” she said.“And I believe that those samepeople should endeavour to gettheir own personal recognitionin their knowledge in this areaand should seek accreditation.

“It’s as simple as becomingmore competent, getting recog-nition and providing clients witha very professional service.”

Yet while Slattery and Vamoswere largely in agreement as to

the improvements that could bederived from increased serviceprovider professionalism, thoseopinions divided when it cameto such an initiative’s flow-oneffects to SMSF trustees.

This was, after all, a hope ex-pressed within the Super Sys-tem Review’s findings and alsoone Slattery believed wouldeventuate.

“I do believe it [increasedservice provider professional-ism and competency] will in-crease the education and com-petency of trustees,” she said.“If you’ve got people who workin this area, have challengedthemselves in this area and passon to you that knowledge andskill to help you to make a de-cision about your future options,then I think everybody’s goingto be better educated.”

However, according to Vamos,that link, that transfer of knowl-edge, is not one that the in-dustry can rely on being made.

“The issue for me is always therelationship and that holds truefor any relationship,” she said.“Certainly, there should be bet-ter regulation of anybody advis-ing on whatever financial prod-uct it is and so the standardsfor self-managed funds should bethe same as for any other advi-sor on financial products.

“But you always have to re-member that you have informa-tion and experience asymmetry,”Vamos continued. “You’ll have theadvisor who is always in the priv-ileged position of knowledge andthough many, many self-man-aged fund trustees do know whatthey’re doing, many do not and,realistically, an adviser’s role maynot necessarily be to educatetheir clients.”

Vamos said that ASFA hadbeen strong advocates of put-ting into place minimum levelsof education for self-managedsuper fund trustees for this veryreason.

“A lot of people understand

they’re in a self-managed fundbecause they are able to man-age their tax, which is great, butdo they know the risks?” askedVamos. “Have they, for instance,taken into account what hap-pens in divorce?

“We’ve seen many womennow who have been disenfran-chised because there’s no con-sumer protection there, no freedispute resolution proceduresand that’s just one issue,” Vamoscontinued. “There’s also been alot of discussion around whathappens when trustees age andthe fact that gains and lossesare crystallised when they moveback into the pool sectors.

“There are a lot of discussionsthat have to be had; it doesn’tmean the sector isn’t good butjust like the APRA-regulatedsector, you’ve got to be on a pathof continuous improvement be-cause we’re talking about peo-ples’ money here.”

Yet irrespective of what dis-cussions must yet be had andwhat improvements must yet bemade, the undeniable reality isthat the self-managed superfund sector is maturing. Andwith the weight of growth andmomentum behind it, the ques-tion is what precisely will takeit to the next level.

For Colley, however, the an-swer to that question is alreadyclear.

“I think improvement in thecompetency of all professionals

that are associated with thissector is the first step,” he said.“And I think that will certain-ly come out of the reform agen-da because you’re already see-ing that financial planners willhave to know a little bit moreabout taxation and that ac-countants are going to be re-quired to have more detailedSMSF knowledge if they’regoing to be competent to meetthis sector’s challenges.

“Over and above that, you’vegot the registration of auditorswhich may mean there’s achange in that market whereyou’ll have SMSF auditors whoare absolutely competent in theundertaking of audits,” Colleycontinued. “So I don’t thinkthere’s any doubt that the com-bination of those things is goingto move self-managed superfunds to the next step wherethey’ll be considered as an ob-jective alternative to the biggersuperannuation funds.”

Adding weight to Colley’s sen-timents, Slattery said that theimplementation of the SuperSystem Review’s proposalswould allow for increased effi-ciency and certainly increasedbenefits for the consumer.

“For the SMSF sector, op-portunities for growth are like-ly to continue simply becauseto be able to tailor and to beable to flexibly manage your re-tirement savings to fit your cir-cumstances, that’s somethingthat will always be very attrac-tive,” she said. “And you can addto that increases in compliance,increases in regulatory surveil-lance and guidance, increasesin competency, the introductionof codes of conduct and the abil-ity for people to be able to ac-cess new products and new ad-vice pieces.

“So with the weight of all ofthat improvement in thepipeline, I think that the futurefor SMSFs looks very verybright.” SR

Graeme Colley


16 ROUNDTABLE www.superreview.com.au

MT: Okay, we’re underway– and the topic is, of course,Stronger Super. I think oneof the more controversialquestions to arise is can theGovernment really seriouslyconsider full legislationaround Stronger Super whilethe question of default fundsunder modern awards is stillto be dealt with in terms ofthe Productivity Commis-sion. So because I alwaysstart roundtables with Rus-sell Mason, I’m going to startit with Russell today.

RM: I think the issue of de-fault funds has really beenhighlighted recently with theconcerns over a couple offunds. And I think we’ve hadSenator Nick Sherry commenton his concern that funds areautomatically becoming de-fault funds. I must admit, Iagree with his approach thatsays a fund must pass certain

hurdles before it becomes a de-fault fund under a modernaward. It should be open. Idon’t think it should be limit-ed to any one type of fund – theindustry fund – if other fundsreach the hurdles they shouldbe included, and it is a majorpart of Stronger Super. So Ijust wonder how much theGovernment can implementbefore they sort out the de-fault funds status, how it’sgoing to work?

MT: David, what’s your takeon it?

DG: Well my view is that theycan certainly implementStronger Super legislationthrough, and I don’t thinkthey’ve got the political willto actually drive the awardmodernisation as fast as thepolitical will to get MySuperthrough. I mean, that beingsaid, once it does get through,

clearly the award process (andthat includes the funds as de-fault) will come – with promi-nence and importance.

RG: I think the process isbeing far too slow in evolving.The Rudd Government waselected in 2007, it’s now fouryears later and we haven’teven got a referral to the Pro-ductivity Commission. It’s to-tally unsatisfactory, and Ispeak on behalf of RichardGilbert, commentator, not onbehalf of any industry in regardto that. But it gets worse thanthat, because Fair Work Aus-tralia is now under examina-tion for its disclosure, and inthe Senate is a resolution toexcuse the President of FairWork Australia for being ac-countable in relation to thisissue – or not in relation to thisissue particularly, but to theEstimates Committee gener-ally. And there’s a motion afoot

in the Senate. I’m not sure thatit’s up yet, but that will effec-tively allow him to exercise hiswishes as to whether he turnsup or not to be accountable.And so the problem with thefact that nothing has beendone is that we are entrench-ing a massive monopoly in de-fault superannuation, which isa very large proportion of SG,and that of course means thereis no built in – effectively nocompetition, or little compe-tition – and there’s a couple ofinsurers here, you guys will bepitching tenders for a verysmall number of funds in theactive part of the SG market.So I think the Government re-ally has got it wrong in not act-ing sooner. And this could takethe Productivity Commissionbest estimates – they mightstart next year, they’ll take ayear to look at it, and the Gov-ernment then takes a year tocome in with something. That’s

got 2013 or 2014 written onit. That is an amazing time-frame for something whichseemingly is so simple. And theIndustrial Relations Club,unions and employers look asthough they’ve fairly compre-hensively taken over defaultsuperannuation. And compa-nies like AMP – and I don’trepresent AMP – that havebeen in the superannuationmarket since before 1900 areeffectively excluded from com-peting in the occupational su-perannuation space. And so it’sbecome a mutual fund showand not a superannuation en-tity show.

DH: Which is what AMPused to be – a mutual fund,but anyway.

RG: Yeah well.

MT: Well David Hartley,what’s your take on it?

Just days ahead of the Government

releasing its Stronger Super package,

a group of industry leaders discussed

its impact and implications.

Stronger Super: Present:

MT: Mike Taylor (Chair) – Managing Editor, Super Review.

RM: Russell Mason – Partner, Deloitte.

PJ: Pierre Jond – CEO, BNP Paribas.

ER: Eric Riesenwitz – Chief Marketing and

Distribution Officer, MetLife.

DG: David Graus – GM Policy, ASFA.

DH: David Hartley – CIO, Sunsuper.

RG: Richard Gilbert – CEO, Rule of Law Institute.

www.superreview.com.au ROUNDTABLE 17


where to now?

DH: I think part of the issuelooking forward is whether ornot you’re getting – you know,you’ve got a compulsory su-perannuation system, theremay actually be a requirementto be a health fund that youhave a cap on the amount ofprofit that you can make fromthat line of business, and that

would seem to be fair. And ifcommercial operators arewilling to operate on the sameprofit margin as industryfunds then it’s probably fairenough. I don’t know whetherthey’re going to, but that’s an-other question.

RG: But markets set that.And when I gave evidence tothat Fair Work Bill I actuallyshowed the committee tendersthat the retail, or the corporatemarket trust made at 60 and70 basis points.

DH: Yeah, that’s the quotedfee. That’s the quoted – there’sno requirement for a trustee ofa superannuation fund in Aus-tralia to say how much moneythat particular body is takingout for the purposes of thetrustee, and how much they’retaking out for related parties.And if you get to fee disclosurewhich gives you those num-bers, then fine. But I wasspeaking to someone about thisissue and they said there’s allsorts of ways that you could ef-fectively quote a zero fee andstill make a bucket load ofmoney out of the whole system.

And they’re talking about vol-ume discounts on spot con-tracts; they’re talking about awhole bunch of different thingsthat I’d never even thought of.And until you can get to thebottom of how much you’re tak-ing – how much you’re rippingout of the system, then you

don’t really have a fair com-parison. And I suspect there’sa whole lot of people who arejust – their job is “How do Ihide these fees?”, “How do Imake this thing profitablewithout looking as if I’m takinga lot of money out?”. So if youcan get to the bottom of thatand find out exactly how muchthe trustee is taking out, theresponsible entity is taking out

for themselves, and for the re-lated entities, then I thinkyou’ve got a fair comparison,then you’ve got a basis forwhich those commercial guyscan operate as a default fund.

RG: So PDSs aren’t repre-sentations of the market?

DH: No. I could arrange –our investments in our par-ticular fund, I could arrangethem so that I could quote anegative fee and have exactlythe same investments as I’vegot now, under the currentrules. It’s ridiculous.

DG: Won’t sort of perform-ance reporting, and you know,

the new APRA disclosure sortout the maintenance on that?

DH: Well it depends on whatthey ask – as to what questionsthey ask. But no, I don’t thinkso. I had a lunch with WayneSwan last week and he sortof asked if there’s differentways people are quoting fees.I said “Oh you bet”. Absolute-ly. There’s plenty of ways youcan quote fees, plenty of waysyou can extract profit out ofcompulsory superannuationwithout the members evenknowing about it. So if you canget to the bottom of that andrestrict the profit margin thatthe commercial guys can takeout of that, because the prof-it for members, I mean, you ba-sically can pretty much seewhat’s going there, but if youcan restrict the profit marginon the compulsory side ofthings from the commercialoperators then I don’t see anyreason why you would favourone over the other.

RG: Well wouldn’t you re-strict the costs that non-com-

Continued on page 18

“There’s plenty of ways you can quotefees, plenty of ways you can extract

profit out of compulsory superannuationwithout the members even knowing.”

- David Hartley

mercial operators are taking aswell? Wouldn’t that be an issue?Why do you just focus on…?

DH: Yeah, so you’d quote it.You’d quote how much youtake. I can tell you how muchwe take, five basis points.

PJ: You know your industrymarkets, at the end of the dayyour unit holders or pensionholders are buying a perform-ance. And in the end, whetherit is one basis point, ten basispoints, or cents…

DH: And industry funds as awhole have outperformed com-mercial operators for 10, five,20 years, whatever. So thereshould be no commercial op-erators in that sense, but theystill exist.

RG: And some industry fundsor corporate funds have donevery well.

DH: Yeah, absolutely.

RG: I think it’s very difficultto generalise.

DH: Yeah, that’s right. ButI mean take the industry as awhole; the industry funds haveout performed the commercialoperators. Now maybe there’ssomething to do with that, Idon’t know. You know WarrenChant has done a lot of survey,a lot of analysis on that sortof stuff.

RG: So is that the reason whyyou’d never allow commercialfunds to be entering the de-fault competition?

DH:No. I’m just happy forcommercial funds to do it onthe basis of – you know, as longas there’s absolute clarity onwhat they’re taking out. Andyou look at the accounts of themajor banks – they’re taking

lots of money out of the wealthmanagement industry, and I’vegot no idea, because the quot-ed fees aren’t all that muchin a lot of cases, but they’re stillripping a lot of money out.

RG: Well, so what’s disap-pointing I think – from thepart of the industry – theredoesn’t seem to be any com-petition. When these de-fault funds came in I thinkthe industry was advised bythe Government that FairWork Australia would betalking to APRA to get in-formation about whichfunds it could put on thelist, and I think in the Sen-ate Estimate’s answersthere has been no such dis-cussion. So your point mightbe valid, but the organisa-tion which has the facts hasnever been in the loop.

RM: In theory, it shouldn’t behard to do the comparison ifthere was a requirement acrossthe board that applied equallyto not for profits as well as com-mercial organisations that saidrebates – any sort of payment– back from the serviceprovider no matter how that’sstructured, admin’ fees ongroup life contracts, whatev-er it’s disclosed and subjectto audits. Then you could eas-ily have a level playing field.

RG: Isn’t there an Australianaccounting standard for pres-entation of those accounts andwhat’s in, what’s out?

RM:Well I’m not an ac-countant, so I’m not sure, butcertainly, I know there are cer-tain payments that don’t haveto be disclosed as part of theMER. They may be disclosed

near accounts when peoplequote management expenseratios, certain things are ex-cluded that are payments thatsomehow just miss the cut, andcan add up to quite a sizeableamount of money. So theMER…

DH: For example, you canput a spot in place, right? Youcan put a spot in place so youhave all your investments; yousell them to someone, and thenenter into a total returns boxso you get what you get for re-turn on those assets back toyou. Now under the rules, thespot fee and all the underlyingstuff does not have to be com-pleted. So you can actuallybury all of your fees under thetotal returns box.

DG: Well all your externalfees.

DH: Well actually, you canbury everything if you reallywanted. If you really wanted to,you can bury everything.

RM: So that’s not in anybody’sinterest. No one’s interest.

DH: Basically, what you’redoing is you’re encouragingpeople to add an extra layer offees on to make it look as ifyou’ve got lower fees, and that’sjust a joke.

RM: Well worse still, it’s en-couraging, misleading and de-ceptive behaviour as far as themember’s concerned. If amember cannot tell what thetrue costs of his fund are. AndI need to know; I should beable to tell.

DH: You think about whatyou’re doing, as a member ofa superannuation fund you areasking – you are employing thetrustee or the responsible en-tity, or whatever you call it,you’re asking that particulargroup of people to act as yourfiduciary agent. And you’re say-ing to them “I want you to ac-cess all of these different serv-ices, and I want you to do it ona basis that’s in my interestas a member”. That’s whatyou’re asking them to do. It isfair for you to know how muchyour fiduciary agent is takingout for their own purposes toprovide that service, how muchprofit they’re making, and howmuch money they’re makingout of related third parties. Andthat’s a reasonable basis. Nowif the trustee is acting – Imean, the opportunity avail-able to industry funds and com-mercial funds is all the sameopportunity. I want to be surethat the trustee of my respon-sible entity, if they’re puttingin passive management I’mquite happy to accept that pas-sive management is a valid wayof managing money. But I want

Continued on page 20


Continued from page 17


Stronger Super: where to now?

Russell Mason

David Graus Richard Gilbert

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to be sure, I want to be con-vinced the main motivation formy responsible entity, my fi-duciary agent to put in passivemanagement is because theythink that’s going to get me abetter net return, not becauseit’s going to make them lookbetter. So if you’re charging 70basis points and you’ve got a lotof passive management underthere, fine. But are you doingthat because you think it’sgoing to get a better return forme, or are you doing that be-cause it’s going to allow youto compete in the market andget a bigger profit margin foryourself? When you thinkabout AMP – you talked aboutAMP before, they’ve got theirproduct, but it’s basically allpassive management. And thefee level which is similar to in-dustry funds, but they’re ba-sically getting their profit mar-gin at a high level by putting inpassive management at thesame fee level that you’d havefor active management.

RM: David, is this driving thedebate in the right direction?If I’m a member of a fund whatis really important to me?

DH: Net return.

RM: What is net returns sub-ject to an acceptable level ofrisk for me? So as long as I’mhappy with the level of risk andthe type of investment, in someways the fees should be irrele-vant, it’s the net return.

DH: The fee that should berelevant is the money that’spaid to unrelated third parties.Because what you want [is] toget to a situation where your fi-duciary agent is only putting inthings that they think are goingto get a better net return. Ifthey go into hedge funds andthey pay exorbitant fees for

hedge funds, but they finish upwith 150 per cent return for menet, they might get a 200 percent gross return and a 150 percent net, okay I’m still 150 percent better off, thanks verymuch. So the trustee, the re-sponsible entity, should not bediscouraged from putting thatsort of stuff in if they thinkit’s in my interest. Now it’s an-other question as to whetherthey think it’s in my interest,but at least you sort of take thatpart aside and you say “Okay,they’re only going to put thisfund in that if they think it’s inmy interest,” then that’s some-thing you can test.

DG: The last thing we wantthe debate to be driven by isthe cheapest possible optionsor passive – simply becausethat produces the lowest fees.

DH: Yep, absolutely. I mean,you can put in ETFs, you canput in a whole bunch of stuff tomake fees look lower, but un-derlying. Another example I’veused in the past is MacquarieBank. Now Macquarie Bank’ssalary, its remuneration ob-jective is to pay 55 per centof operating income to staffin the form of bonuses andsalaries. You think about Mac-quarie Bank, underneath it all,it’s a little bit like a multi-strat-egy hedge fund. But if theymake 20 per cent return, I’monly going to get nine as an in-vestor. But if I go to a multi-strategy hedge fund and theymake 20 per cent return, wellI’ll get 15. It’s a better deal, bet-ter economics for me. Despitethe fact that hedge funds areseen as being expensive, I’mbetter off going to hedge fundsthan going to Macquarie Bank.

DG: But the net return is re-ally going to be 15 per cent?

DH: Yep, absolutely.

RG: And so if there [are]all fees included, you need toreport in the return figures.

DH: What do you mean by allfees though?

RG: All fees. So it’s really onlythe net return…

DH: After all those fees?

RG: Yeah.

DH: That’s right. That’s thefirst thing I’m interested in. Thesecond thing I’m interested inis how much my responsible en-tity is taking out to provide thatservice. If they’re charging me$100,000 I’d just as soon do itmyself. If they’re charging me$100, I’m happy to pay my $100.

RG: But we’re talking aboutdefault funds here.

DH: Yep.

RG: I think it’s not the netreturn, it’s the net risk ad-justed rate of return, becausesome people like their moneywith a shareholder backedcompany. And that’s anotherreason why the default systemshould be far more pluralisticthan it is.

DH: Shareholder backedcompany…

RG: Well shareholder capi-tal does mean something tosome people.

DH: Yeah, but a lot of times

it’s isolated, it’s segregated soyou can’t actually – I mean,sometimes the responsible en-tity, even though it’s part of abig group, it’s actually the cap-ital available for that particu-lar trustee.

RG: Well yeah, but I agreewith that, but if you look at theOne Life company, it got intotrouble on unit pricing, and $70million went from the share-holder backed entity to com-pensate those investors, andI think that sort of action doesgive people some comfort. NowI’m not saying that everyoneshould have their money inthose sorts of funds, but for in-vestors it is a sucker some-times. Not sucker, but it is acomfort to know that there isan entity standing behind itwith capital.

DH: Yeah, and I thinkthat’s a good thing, that’s thereason why Sunsuper has$200 million of free reserves,we think it’s an importantthing to have.

PJ: We seem to be focusingthe discussion around the purecost dimension of the super-annuation industry, becausewe’re talking about fees, we’reessentially focusing all the at-tention on the cost side, isn’tthat making the case for self-managed super funds? Whichis a bit of a paradox?

DH: Sorry, I’ve sort of missedthe point. But self-managedfunds have certainly grown,and I think – this is anotherthing I was talking to WayneSwan about last week, and hesaid there are some issuesthere. But anyway, so the pointI was making, I guess, was thatself-managed funds are actu-ally pretty good, to tell you thetruth, for the right person. Be-cause you can structure yourself-managed fund so you pay

Stronger Super: where Continued from page 18

“So the point I was making, I guess, was thatself-managed funds are actually pretty good,to tell you the truth, for the right person.”

- David Hartley

David Hartley

www.superreview.com.au ROUNDTABLE 21


to now?no tax ever on superannuation.So basically it’s a system that’sbecome where taxation is op-tional for the rich people andit’s compulsory for the poorpeople. And if the Labor Partywants to continue with thatsystem, that’s fine. But that’swhat it is at the moment – par-ticularly because they allownegative gearing in thosethings, so you can wipe out allof your contributions tax, youcan wipe out all your incometax all the way through, get thething pregnant with capitalgains, and then at the pointof retirement you flip it over tothe pension phase, pay no taxon the other side. It’s a greatsystem. It’s perfect for peoplewho want to pay no tax.

MT: Eric, you’ve been veryquiet there, what’s your takeon what you’ve heard?

ER: I think the issue that Icome back to, and focusing onthe insurance side, and whenI see the opportunity that couldbe out there with prospectiveinsurance, using MySuper au-tomatically gets me a littlenervous. If I think about it interms of in today’s world weknow – it’s well documentedthe under insurance issueacross Australia, you ask a lotof people who have their

money invested in their choiceof super fund – they’ll tell youthey’ve got insurance becausethey are in a fund. We all knowfrom an industry perspectivethat’s not enough insurance.When you start moving peopleinto an environment wherethere is an opportunity forthem to go somewhere else,and that somewhere else is la-belled a default, it also givesa sense of comfort that I’m

being covered, that that’senough. They almost stop look-ing at what more they have todo. Beyond the returns, I thinkyou’re always going to have thatas the primary reason peoplepick their choice of what theydo with their superannuationfunding. At what point will theyalso start looking at what theirinsurance options are? Eventhough the Government isusing the right words around

the need for insurance, I seethere’s a risk in the more youtake away from people in thedecision making process, theless they start to think abouthow much coverage they have,and regardless of whether it’sunder a default fund or it’sunder their choice, the factthey still probably don’t haveenough insurance. At the samepoint in time when people areasking for education around

their financial security, theydon’t want to stop just at“Where should I invest mymoney?” they want to stop at“What happens if I can’t workanymore?”, “What happens ifsomething happens to my part-ner, or someone whose incomeI rely on who is no longeralive?”, “How do I deal withthat?”. And I get a little nerv-ous that there’s too little at-tention being paid on the ag-gregate, and that all the focuson what will be a default orwon’t be a default might dis-tract individuals away fromthinking about what’s impor-tant to them for the financialsecurity of their lives.

IMPACT OF MYSUPERMT: With MySuper, and this

was the criticism which wasraised right from the get-go,which is that we’ve gonethrough – about a decade oftrying to get people to basi-cally engage with their su-perannuation and make somehard decisions – I think thisis what Eric’s getting at. ButMySuper is basically tacitlysaying, or my view, it’s tacit-ly saying “You don’t have tobe that engaged, we’re goingto take care of you”, “We’ve

Continued on page 22 ☞

“I get a littlenervous that there’stoo little attentionbeing paid on the

aggregate, and thatall the focus onwhat will be a

default or won’t be adefault might

distract individualsaway from thinking

about what’simportant to themfor the financialsecurity of their

lives.”- Eric Riesenwitz Eric Riesenwitz

got this model that says allthings being equal you willearn a fair rate of return with-out thinking too hard aboutit”. Really, given how super-annuation has developed inAustralia, is this appropri-ate? I mean, I know the Gov-ernment’s adopted it largelyas policy, but is it appropri-ate? David?

DG: I think in the defaultspace absolutely it’s appro-priate. It’s like a heart tick ona product, that if you don’thave people compulsorilylooking for these things, andwhether it’s a good thing ornot, we know that a numberof people are not engaged. It’sbeing taken from their wagewithout any activity of theirown, so there has to be a basicsafety net around [the] My-Super product. Absolutely.

DH: Depends how it’s implemented.

RG: Well I think the otherthing is MySuper on its own isnot good policy, it needs to beaccompanied by very sub-stantial governance reforms,which aren’t in the wind, andthe Government refuses tolook at governance reforms.And I think MySuper is takingsuperannuation to a very pub-lic space, which should be ac-companied by the same sortsof governance requirementsthat an ASX listed companyhas. And so it’s critical thatfunds have detailed conflictsof interest disclosure, that di-rector remuneration and CEOremuneration is there, and Ithink also it’s time for reformof funds which have stodgyboards. And we need to lookat turnover on boards, andrepresentation on boards if wego down that space. And Ithink doing it on its own isquite dangerous.

MT: Russell?

RM: Well just going back toMySuper, I agree with David,it’s an essential basis, but it’salso essential that the trusteesremember that their primaryduty is to act in the best in-terest to members, and there-fore I think what they shouldbe doing is educating membershowever they can, as Eric said,about the importance of groupinsurance, and the death anddisability insurance. To David’spoint, the investment returns,the risk, so it’s a good start-ing point, MySuper. I’d hateto think that a member joinedMySuper and was then forgot-ten about, because while it maysuit someone in the early ini-tial phase of their membership,it’s highly unlikely to suit them

for their entire length of mem-bership. So I think the exec-utives of funds, the trustees offunds should view it simply asthe entry point into the fund,and then the education phasestarts, and I think a very suc-cessful one would be one thatattracts lots of members intothe MySuper, but at any onetime very few members are ac-tually in it because they’vemade some active decisionsand they’ve moved to other in-vestment options. So I thinkthat’s important. I thinkRichard makes a very goodpoint about governance ofthese funds. And again, let’s notdistinguish – be they corporate,commercial, retail, industryfunds, are large financial in-stitutions – they’re massivefinancial; many, many billions

of dollars. And they should besubject to the same gover-nance. I think I agree, it’s apublically listed company. AndI think many of them would behappy to be subject to that gov-ernance. I’m sure, which Davidrepresents, has got nothing tohide, it’s a transparent fund, sowith it’s huge size should itbe accountable to members inthe same way a public com-pany is? Yes, because thesemembers are the shareholdersas far as I can see.

DH: I’m sure the directorswill be looking forward to thesame remuneration structureas the directors of other com-panies too. Well so be it.

RG: Yeah, that’s right. Nowmy main concern about My-Super, if it’s implemented thewrong way there will be verylittle differentiation betweenone MySuper product and an-other MySuper product. Andin the public’s mind they won’tdifferentiate. They’ll say “My-Super, okay, whoever, does-n’t matter, it’s the same thing.”In that market, if the fees arequoted in the current way,what you’ll find is you will findthat those trustees will gomore and more passive, andyou will lose something whichis very important for the econ-omy, which is price discovery.And if you don’t think this is areal issue, have a look at theprice between BHP listed inAustralia and BHP listed inthe UK and Rio. So there’ssomething like 20 or 30 percent difference in the price.And why is it when you’ve gotexactly the same rights, ex-actly the same title cashflows,why is the Australian BHPtrading at 20, 30 per cent high-er than the UK BHP? Now onepotential reason for this is thatyou have a lot of superannu-ation money in Australia, youhave a lot of money going toAustralian shares – a lot of

that’s enhanced capacity orpassive, a lot of it goes intothose particular shares. And ifthat’s a bellwether for whatmight happen in MySuper andthe way it pushes everyoneto passive, then it’s a very dan-gerous system, and you runthe risk of having the biggestPonzi scheme the world hasever seen. Is that controver-sial enough for you? [laugh-ter] I don’t think we shouldnecessarily rely on the Gov-ernment, press the Govern-ment’s button – APRA hasthose powers. And APRA didthis after the GFC with thebanks and made them do evenmore harsh corporate gover-nance arrangements, but itdidn’t do it for super. It doeshave the power. Helen Coonanput a bill through which clar-ified that power, showed thatclearly, and APRA could bedoing something in that space,but it elects not to. I think it’swaiting for Canberra to give itthe signal. But APRA is an in-dependent regulator and ithas to look at the market andmake sure that it’s protectinginvestors by making sure thatthey know about their funds,the salient features.

DH: The other argument, ormy other question of course, isyou look at the GFC and ofcourse lots of things happened,not that many Australian su-perannuation funds got intothe same sort of problem asLehman or Merrill Lynch, whohad very professional execu-tives. So it’s not immediatelyapparent that the model thatwe had was severely underwhat you’d expect to have hap-pen in that sort of environ-ment. So arguably, maybe thebanks should have a few morepeople who are ordinary –sorry, people who have justbeen, you know, got the best in-terests of the constituents atheart as opposed to profits, orwhatever. SR


☞ Continued from page 21


Stronger Super: where to now?

“Not that many Australian superannuationfunds got into the same sort of problem as

Lehman or Merrill Lynch.”- David Hartley

Pierre Jond

www.superreview.com.au APPOINTMENTS 23


BNP Paribas Securities Serviceshas appointed Barry Dench asthe new head of its New Zealandbusiness, based in Wellington.Dench will report to the manag-ing director of BNP Paribas Se-curities Services in Australia andNew Zealand, Pierre Jond.

Dench was previously head ofWestpac’s custody business, wherehe has been responsible for clientservice and relationship man-agement for asset managers inAustralia and New Zealand.

CHALLENGER Limited hasappointed Aaron Minney to thenewly created position of headof retirement income research.Minney will report directly toChallenger’s chairman, retire-ment income Jeremy Cooper,and the new role will extendthe company’s research andanalysis capabilities specific tothat sector.

Cooper said Minney’s appoint-ment supported Challenger’sleadership ambitions in the re-tirement income market, a sectorthat would become increasinglyimportant as the first wave of babyboomers start moving into re-tirement this year.

Minney joined the firm fromColonial First State GlobalAsset Management, where hewas head of investment researchand development. He had pre-viously held portfolio manage-ment roles as head of Australianfixed interest at MacquarieFunds Management, and as asenior portfolio strategist at In-surance Australia Group.

AVSUPER has announced the ap-pointment of Scott Malpass to

the newly-created role of invest-ment officer.

The role will focus on the analy-sis and monitoring of the firm’sinvestment portfolio.

Malpass will play a crucial rolein responding to increasingmember demand for more com-mentary, information and edu-cation about superannuation in-vestment matters in general andAvSuper’s investment portfolioin particular.

As well as holding formal fi-nancial management qualifica-tions, Malpass was trained as acadet in a super administrationfirm where he worked with bothdefined benefit and accumulationaccounts.

More recently, he worked forMilitary Super’s investment/op-erations team dealing with unitpricing, investment compliance,fund operations and alternativeinvestments.

DEUTSCHE Asset Managementhas appointed credit analyst Jen-nifer Wee to its fixed incometeam based in Melbourne.

In her new role, Wee will con-tribute to the management ofDeutsche Asset Management’sAustralian fixed income portfo-lios, along with local team mem-bers Chris Siniakov, AndrewCanobi and Steve Sutcliffe.

She will be responsible foranalysing investment grade cor-porate bond issuers and join theinvestment team which numbersover 150 staff.

Wee joined Deutsche Bankwith more than six years indus-try experience, including fiveyears at Standard & Poor’swhere she was most recently a

ratings specialist in the corporateratings area.

AUSTRALIAN Unity Investments(AUI) has made several senior ap-pointments as part of a restruc-ture of its business operations.

Stephen Alcorn has joinedAUI as head of institutional,based in Sydney. He was mostrecently deputy managing di-rector at BNY Mellon AssetManagement and has also heldthe roles of director, institu-tional business and head of con-sultant relations during his timewith the firm.

Kara Gilmartin, an internalhire for AUI, has moved to therole of head of joint ventures.She previously worked as AUI’sexecutive manager supportingthe chief executive officer,David Bryant, in business-wideand joint venture initiatives.

Peter Loosmore has joined asthe new chief operating officer(COO), having previously heldCOO roles at Suncorp Group, StGeorge Bank, Asgard WealthSolutions and Rothschild Aus-tralia Asset Management, aswell as management consult-ing roles with Deloitte. LeoniePratt, who was previously AUI’schief operating officer, hasmoved to the newly-created roleof general manager – executive,where she will look after AUI’scorporate governance responsi-bilities including licences andcapital usage.

Pratt has over 20 years finan-cial services industry experience,including eight years at Intech insuch roles as head of institution-al client services and head of in-vestment operations. SR

McKeand will be responsi-ble for the developmentand implementation of a

comprehensive strategy for theconstruction and management

of AustralianSuper’s equitiesportfolio and will report to thefund’s chief investment officer,Mark Delaney.

Prior to this role as head of eq-

uities at Aegon, McKeand waschief investment officer at AIB In-vestment Managers, and beforethat he was head of investment atthe Nestlé UK Pension trust. SR

McKeand joins AustralianSuperEvents Calendar

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

OCTOBER

VICTORIA

4 – Finsia Seminar: Superannuation reform – what willsuper look like in 2015? Speakers: Danielle Press, CEO,Equipsuper; Adeline Hiew, senior associate, Blake Daw-son; Paul Murphy, principal consultant, ImplicationsConsulting; Michael Drew, managing director, lifecy-cle strategies, QIC; Hans Van Daatselaar, head of pol-icy at Superpartners. Venue: Sofitel Melbourne OnCollins, 25 Collins Street, Melbourne.

13 – Finsia Seminar: SMSFs – Strategies for imple-menting Stronger Super Reforms. Venue: CQ Func-tions, 113 Queen Street, Melbourne.

WESTERN AUSTRALIA

11 – Finsia Seminar: Superannuation reform – whatwill super look like in 2015? Speakers: Danielle Press,CEO, Equipsuper; Ruth Stringer, partner, Blake Daw-son; Dennis Barton, director, Barton Consultancy;Michael Drew, managing director, lifecycle strate-gies, QIC. Venue: Hyatt Regency, 99 Adelaide Ter-race, Perth.

QUEENSLAND

18 – Finsia Seminar: Superannuation reform – whatwill super look like in 2015? Speakers: Jenni Erbel,CEO, MAP Funds Management; Adeline Hiew, seniorassociate, Blake Dawson; Anne Fuchs, managementconsultant, lifestyle strategies, QIC; Michael Drew,managing director, lifecycle strategies, QIC. Venue:Stamford Plaza Brisbane Hotel (Raffles Room), CnrEdward and Margaret Streets, Brisbane.

NEW SOUTH WALES

11 – Finsia Seminar: SMSFs – Strategies for imple-menting Stronger Super reforms. Venue: Establish-ment, George Street, Sydney.

28 – FSC Deloitte Leadership Series Lunch. Speak-er: John Symond AM, founder and executive chairman,Aussie. Venue: Four Seasons Hotel, 199 George Street,Sydney.

AustralianSuper has appointed Innes McKeand from UK manager

Aegon Asset Management to the newly created role of head of

equities, working across both local and international equities as

well as developed and emerging markets.

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

ROLLOVER T H E O T H E R S I D E O F S U P E R A N N U A T I O N

Solvent spouse sitting pretty

Got afunnystory? about people in the superannuation industry?

Send it to Super Review and youcould be raising a glass or two. Super Review is giving away a bottleof bubbly for the funniest story published in our next issue.

Email [email protected] send a fax to (02) 9422 2822.

LIKE a lot of other people,Rollover received his six-month-ly superannuation account bal-ance statement early last monthin the knowledge that therather satisfactory 30 June fig-ure was nothing more than asnapshot in time.

Rollover had watched theweekly gyrations of the equitymarkets in the sure and certainknowledge that most of the re-covery in his super account bal-ance since 2008 had been large-ly whittled away by what somepeople have been describing asa the GFC MKII.

It is with this in mind thatRollover will be closely observ-ing the impact of the markets on

the superannuation account bal-ance of his lovely spouse, Mrs R,who just happens to be a mem-ber of an industry superannua-tion fund.

With the major superannua-tion ratings houses suggestingthat, once again, higher alloca-tions to non-listed assets willhelp insulate the industry fundsfrom the current market un-pleasantness, Rollover may seefit to direct more funds towardshis wife.

On the other hand, he is mind-ful of suggestions that the Aus-tralian Prudential RegulationAuthority in 2008 had to reminda couple of industry funds abouttheir liquidity requirements. SR

A gulf ingolfing

INDUSTRY Super Network chief executive DavidWhiteley has developed a considerable reputationfor creating great annoyance among financial plan-ners each and every time he sees fit to criticise theirindustry and the manner in which they are remu-nerated. Rollover therefore admires Whiteley’s braveacceptance of an invitation to sit on a panel atthe Association of Financial Advisers annual conference on the Gold Coast this month.

The AFA has been one of the most vocal defend-ers of the financial planning industry and, indeed,one of the harshest critics of the activities of someindustry superannuation fund operatives, which maymake for some interesting questioning.

Rollover recalls, however, that when financialplanning industry chiefs have spoken at industrysuperannuation fund conferences they have beentreated with politeness and respect. SR


Fool’s gold orpaydirt for FPs?

ROLLOVER breathed a deep sigh of relief when theAssistant Treasurer and Minister for Financial Services, Bill Shorten, last month finally releasedthe final version of the Government’s StrongerSuper policy package.

By Rollover’s reckoning, the Stronger Superpackage has been the subject of some interest-ing nips and tucks since the Government received the recommendations of the CooperReview last year.

In fact, it may be a measure of just how farevents have moved along that amid lastmonth’s discussion about the final shape ofStronger Super, few journalists or com-mentators sought to consult with the former Cooper Review chairman JeremyCooper. SR

Stronger Super -v-

wet paper bag

ROLLOVER can only imag-ine that after more than 20years at Mercer, remunera-tion must have been a factorin luring Russell Mason toaccountancy outfit, Deloitte.

Mason took up his newpartner role at Deloitte inlate September, and asRollover understands it, thegreat man has found himselfwith a schedule so busy thatit has virtually precluded hislong-standing pursuit of golf-ing greatness.

Rollover presumes, how-ever, that as someone integral to the Associationof Superannuation Funds ofAustralia conference in Bris-bane this year, Mason willmake time available in hisdiary to participate in thetraditional pre-conferencegolf day.

Rollover also hears ru-mours that Mason may notbe the last Mercer staffer tohead down the road to Deloitte this year. SR

Documents

Super Review (October 2011)