Russell Investments head of institutional business for Australia Jodie Hampshire told InvestorDaily that the small business-focused industry super fund had “fully outsourced all functions of running the fund to Russell Investments”.
Nationwide Super will hand over responsibilities of oversight and governance, risk management, and legislative guidance to the global asset manager.
“Key Nationwide staff will join the broader Russell Investments organisation, so as to retain knowledge of key target market and what’s important to small businesses and the existing 35,000 members,” Ms Hampshire said.
However, she asserted that the arrangement, which is expected to complete in late 2018, was not a merger, as Nationwide Super would “continue to exist as a standalone brand”.
“We see this as an alliance rather than a merger (where one brand is subsumed by the other),” Ms Hampshire said.
“Beyond just the Nationwide example, the alliance model is flexible enough to accommodate the spectrum of outsourcing: that is, some have fully outsourced super to the Russell Master Trust”.
“Others that outsource parts of their offer to us including [sic] trusteeship, and yet [there are] others that outsource parts of their offer (e.g. investments, member services) but retain their own trusteeship.”
Nationwide Super will retain Link Super as its administrator and CommInsure as its insurer, according to a statement by Russell Investments.
Nationwide Super chair Kim McHugh said in the same statement that the industry super fund’s “absolute priority” was helping small businesses and their employees.
“Super creates administration and compliance pressure for small business that simply isn’t acknowledged or addressed by many larger funds.
“We were looking for a partner that would take the time to understand our members and employers and help shape our offer to even better meet their needs,” Ms McHugh said.
Nationwide Super chief executive Ian Morante added that the “alliance model” would save costs in the areas of investments, administration, product management, technology and compliance.
“These savings will be passed onto our existing 35,000 members as lower fees and upgrading our offer and services to be even more tailored to small business.”
Ms Hampshire said in the statement that the ‘alliance model’ was “a real alternative to the vanilla merger”.
“Our alliance offers a way for independent superannuation funds to grow and sustainably evolve,” she said.