Michael Dwyer: Chief executive of First State Super.
How have the Government's Better Super initiatives benefited your fund?
The Better Super changes have raised the importance of super with members and this has meant even greater member interaction with the fund. First State Super experienced an increase of over 70 per cent in roll-ins and an increase of over 314 per cent in member after-tax contributions.
What has been the biggest challenges facing your Fund in 2007?
The implementation of Better Super meant that many administration changes have been necessary and the communication exercise to our 510,000 members was a major task. The introduction of our allocated pension and transition to retirement allocated pension in October 2006 was also a significant achievement.
What will be your next challenge in 2008?
Members are now more engaged than ever before with their superannuation, so member education and communication will be a critical focus for our fund in 2008.
We will also be introducing new insurance arrangements late in 2007, to substantially improve the levels of automatic cover as well as providing improved premium rates for over 300,000 members.
What policy initiative would you like the newly elected government to focus on in superannuation?
Simplification of product disclosure statement (PDS) documents should be a high priority for a newly elected government. Feedback from members indicates that lengthy PDS material is often difficult to read and is confusing.
Do you plan to expand financial advice to your members?
Our recent member study found that the most important issue for all members, but in particular for those aged 40-55, was to find out how much would be enough to fund their post-working years. The need for advice of this type clearly demonstrates the need for launching a financial advice service.
Tony Lally: Chief Executive of Sunsuper
How has the simple superannuation initiatives affected your fund?
It has been a terrific year for us. We have received over $2.5 billion in contributions from these initiatives. Our personal contributions alone have more than doubled compared with last year. For June alone, the fund received $243 million in personal contributions. Over the year we have grown by over 34 per cent.
What is the biggest challenge for your fund in 2007?
Implementing the Better super changes while at the same time making sure members had all the information they needed to take advantage of the new rules was critical this year.
We were also sharply focused on pursuing new investment opportunities, especially in alternative assets. This year we increased our exposure to assets such as infrastructure and property through our deals with Colonial First State Private Capital and Makena Capital Management.
What are the challenges for 2008?
In the past members simply received a payout from their superannuation fund and then fell prey to financial planners who charged high fees. We are hoping to build our capabilities in the area of retirement so that we help our members prepare for their retirement.
Competition from choice of fund has only just started to happen. We are confident that our fund has the brand and capabilities to remain competitive. We already have one million people from Queensland alone and as such we will be looking to grow our fund on a national basis.
What policy initiative would you like the newly elected government to focus on in superannuation?
We hope that the newly elected government will focus on the level of people's retirement savings. Measures such as encouraging people to add more than 9 per cent to their superannuation or widening the co-contribution initiative would be welcomed. We also need to enhance and clarify the disclosure on fees.
Do you plan to expand financial advice to your members?
Overall we have 20 financial planners. We receive over 200 calls a week to our Member Advice Centre and we will be looking to expand this service as our member needs grow.
Graeme Miller: Head of investment consulting at Watson Wyatt.
How have asset allocations changed in 2007?
In general, our clients have not made significant changes to their asset allocations over 2007. Our clients' portfolios continue to include a range of asset classes that seek to exploit a range of diverse risk premium.
What sort of advice will you be giving your clients in 2008?
The investment landscape is changing at a faster pace then ever. It is becoming more complex, and more inter-connected. Our clients are experiencing more competition than ever, for members, for investment opportunities and for talent.
What kind of investment strategies will you see emerge next year?
We expect many of the current trends to continue. For example within equities, we will continue to see a move away from low tracking-error benchmark hugging managers towards higher conviction, less benchmark focused strategies at one extreme, and towards more passive structures at the other. Institutional investors will become less prepared to pay active management fees for passive outcomes, and will increasingly embrace new strategies to obtain their beta exposures. We will also see more focus on after-tax investment outcomes, as well more scrutiny of manager fee structures to test the levels of alignment between fund managers and their clients. We also think that the trend towards taking sustainability into account when making investment decisions is likely to continue to gather pace.
Simon Eagleton: Head of Mercer Investment Consulting
How have asset allocations changed in 2007?
The theme of the past few years of pursuing further diversification of capital market risks, otherwise know as beta, has certainly continued. This has been through additional allocations to overseas assets such as infrastructure, global property and emerging markets or through seeking a much greater contribution to return from manager skill or alpha. The latter has been achieved through greater allocations to hedge fund of fund or multi-strategy funds, as well as greater use of strategies like 130/30.
How has your business evolved in 2007?
Mercer has grown over the past year in all areas of our business including our traditional work for large super funds but also for endowments, foundations and insurers. Our retail initiatives in providing global research services to the financial planning community have also been very successful.
What will be the sort of advice that you will be giving your clients in 2008?
The way to win in investment is to pursue incremental improvement in everything. This means further diversification of beta exposures without compromising long term returns, and more alpha. In the coming year we expect our clients will be looking at operational aspects of their investment programs including operational risks within their investment managers and custodians as well as transaction costs - such as improving after tax results. Risks associated with sustainability covering environmental, social and governance issues as well as the sustainability of client's manager structures to deliver consistent alpha will gain increasing focus.
What kind of investment strategies will you see emerge next year?
More 130/30 style alpha extension approaches particularly in global equities. More absolute return approaches in various forms and a continued broadening of fixed income managers' alpha toolkit.
David Elia: chief executive. Hostplus
How have the Government's simple super initiatives benefited your fund?
The Simple Super changes have not had an immediate impact on our fund because the average age of our members is 27. Obviously for the portion of our membership approaching retirement the abolishment of reasonable benefit limits and the prospect of a tax free super pay out is an appealing one. Like other funds we did experience a spike in contributions prior to June 30to take advantage of the non-concessional contribution cap.
What were the biggest challenges you faced in 2007?
Explaining the changes in the law to our young members in a manner and in a language they understood. The continuing growth of the fund also presented challenges in servicing both our members and employers. We addressed this by bringing our contact centre in-house so we could better monitor our phone services. Delivering strong returns for our members in a sometimes volatile market also presented challenges.
What will be your next challenge in 2008?
To increase the financial literacy and engagement of our member base. We plan to expand our financial literacy program, roll out more member seminars, as well as produce educational booklets, podcasts and a new microsite, kachingkaching.com.au.
Retention remains a key issue for the fund, as we have a large portion of casual, young workers as members. We aim to increase their understanding of super so they can take Hostplus with them when they changes jobs.
What policies would you like the new government to introduce?
An expansion of the co-contribution to a higher income bracket, an increase in the superannuation guarantee (SG) levy from 9 per cent to 15 per cent to address adequacy issues, and soft compulsion where employees contribute a percentage of their salary to super to be matched by employer.
Do you plan to expand financial advice to your members?
Hostplus has a number of embedded financial planners who are available for our members. However, we recognise that in many cases in our member demographic that increased financial literacy is of a higher priority than financial planning. Without the fundamentals of finance our members may not be in a position to maximise their financial future. Once they have the basics they will be better empowered to understand their financial needs, including whether they need to see a planner for a comprehensive review. However, they need to learn how to walk before they can run.
