Super funds to be more like banks

Three not-for-profit superannuation funds are planning to launch a transactional banking facility by July this year. The funds will issue cards with payment linked directly to members’ super balances, allowing members to withdraw money as they need it, much like a bank card linked to a bank account.

Cuscal, a provider of transactional banking to retail financial institutions, decided 18 months ago to move into the superannuation space to enable not-for-profit super funds with no retail banking partner to offer a transactional banking facility.

Two months ago, Cuscal secured its first three clients, two moderate sized industry funds and one corporate fund. Cuscal’s wholesale product allows any fund to issue cards that will be branded in each fund’s own name. Chris Malcolm, business development manager at Cuscal, said “we are focussing on super funds not linked to any bank, and providing them with the ability to offer transactional banking with a partner who doesn’t compete with them at a retail level”.

Malcolm said that transactional banking would not add any administrative burden for the fund, which would be outsourced to Cuscal’s technology partner, Ultradata. Introducing a transactional banking facility allows a super fund to increase the time that funds are kept under management. Members drawing down their minimum 4 per cent per annum pension are able to withdraw the money directly from the fund as it is spent, rather than in lump sums transferred periodically to sit in a bank account.

For the member, it maximises the time their money spends earning higher returns in the super fund, which of course is tax-free, unlike the interest earned in a bank account. Transactional banking is already on offer in for-profit super funds that are linked to financial institutions, such as ANZ and Westpac.

, , , , , , , , , , ,

Leave a Comment

The twin forces rewriting the rules of investing

Portfolios built for the old world will be severely tested as emerging forces rewrite the rules of investing. The Top1000Funds.com Fiduciary Investors Symposium heard that geopolitical and macroeconomic upheaval, together with the disruption wrought by AI, should force asset owners to rethink the structure and composition of portfolios.

Sort content by