A review by external ratings agencies has prompted a Melbourne-based fund to launch an allocated pension as part of a member retention strategy at retirement, while its new insurance arrangements have seen group insurance cover rise by 67 per cent.
The $235 million OAMPS Superannuation is expecting to launch its new allocated pension in October, having worked with its administrator AAS to build a product that would complement the super fund.
The pension stream product will offer members six investment options, compared to 10 for the super fund, and charge slightly lower fees than the super fund.
Members in the default ‘Retirement Growth’ option will pay 1.25 per cent for the first $250,000 of assets, 1.15 per cent for assets between $250,000 and $1 million, and 1.05 per cent thereafter, plus an $11 per month member fee.
For the super fund, members pay 1.42 per cent on the first $20,000, 1.22 per cent for assets between $20,000 and $250,000, 1.12 per cent for assets between $250,000 and $1 million, and 1.02 per cent for $1 million-plus balances, plus a $52 per week member fee.
“We went through a ratings process in the last 12 to 18 months with external ratings agencies Chant West and Super Ratings and it was identified that [the lack of allocated pension] was a bit of a gap in our product,” said Mark Hutchison, business development manager at OAMPS Super.
“We’ve also got an ageing membership, or a large number of members within that demographic that have that need [for a pension product], so we’re trying to respond to that as part of a retention strategy that we’ve developed.”
Hutchison said the product offered fewer investment choices “for simplicity” and a similar arrangement to the super fund, to make it as easy as possible for members to transfer from the fund into the allocated pension.
“We’ve had a number of members telling us that they wanted to stay in the fund but that they needed to start thinking about allocated pensions and transition to retirement pensions,” he said. “Our product will have both of those features.”
OAMPS Super has made a number of changes over the last 12 months, including fee reductions within the super fund, new insurance arrangements and an upgrade to the fund’s website and member communications.
Fees were reduced by up to 30 per cent from March for the Retirement Growth option, while a re-tendering of group insurance resulted in improved premiums and cover through incumbent insurance provider AXA Australia.