Boom in new pensions for UniSuper

The $24 billion UniSuper experienced a five-fold increase in new pension applications during the September quarter this year.

The result has vindicated the fund’s confidence its pension product is competitive among its peers. Over 1300 members took out a pension from July to September this year. A typical average for a quarter is 250 new pensions. Paul Murphy, UniSuper marketing manager, attributed the huge leap largely to the Simpler Super legislation introduced at the end of June, which allowed for tax-free super drawdowns and for people to work part-time while taking a pension. However, he said the increase was also recognition of the super fund’s work to retain members at the pension stage, particularly given the competition around pension products. “That’s the real marketing challenge for funds like ours, and all not-for-profit funds: how do you actually keep competitive in the pension stage?” he said. The 425,000 member fund has a “big pipeline of high balance members” with many of them being the kind of people who would find self-managed super appealing, according to Murphy. He said much of the fund’s marketing effort is around retention of such members. “Once they hit retirement they’re fair game for anybody, so we’re up against all the retail providers [of pension products] as well,” he said. Meanwhile, index fund manager Vanguard opened its first pension product this week. The Personal Pension Plan boasts Vanguard’s trademark investment approach at a relatively low price with a range of options. Investors can build their own portfolio using the six asset-sector options or can choose from four pre-mixed diversified options to match their risk profile. Murphy said low cost is probably a hook for UniSuper pensioners, but the fund will need to increase its product innovation to remain competitive. It is doing “a lot of exploration” on this front, but has no findings that can be discussed at this stage. UniSuper’s September quarter figure for pension inceptions is not going to be the new baseline for every quarter, Murphy said, as there was a lot of pent-up demand while members waited until June 30 for legislation to become active. Unlike most industry super funds, UniSuper has had a pension product since the 1980s. Many funds are still without an allocated pension. Industry fund AustralianSuper is slated to launch its first pension product on January 1. Over 5000 members of the $30 billion fund have already pre-registered their interest via its website with almost no marketing campaign around the product, according to marketing and communications manager Alison McIvor.