Prime Super, the $1 billion, 150,000-member super fund for rural workers, will review its member administration arrangements, and is also making some fundamental changes to the ‘two portfolio’ approach championed by its asset consultant, Access Capital Advisers.
The member administration contract will be put out to tender at the expiration of an initial 18-month agreement with Pillar Administration, which became Prime Super’s administrator early in 2009.
The chief executive officer of Prime Super, Lachlan Baird, said the fund was happy with Pillar’s operational performance, but had “some concerns about where the organisation is going” as it “built itself up for a sale” by its owner, the NSW Government.
Baird said Prime Super’s board liked being one among a handful of clients on Pillar’s books, an exclusivity that may be lost if the administrator is sold to a competitor.
Meanwhile, Baird said the fund would broadly be sticking with the investment approach designed for it by its asset consultant, Access Capital Advisers.
“Alternative investments, unlisted investments are at the bottom of their cycle now, so we wouldn’t walk away at the moment,” he said.
However, changes are afoot. Prime Super built up a 20 per cent cash exposure in its default balanced fund from banking inflows as the GFC unfolded, as well as “pulling out of a couple of small investments”, according to Baird.
In common with other Access clients, the fund has now reintroduced bonds to its portfolio, in a departure from the previous asset allocation policy which held that infrastructure investments could substitute for their long-term income generation and price stability.
Some of the cash will also be deployed to Australian equiites, where Baird said the fund was abandoning the previous Access advice to only invest via an enhanced passive approach. Baird said the fund had decided there was worthwhile alpha to be generated from selection of good active Australian equity managers.
Baird said the fund had been satisfied with the valuations of its unlisted assets supplied by the Access-appointed valuers. Fellow Access client MTAA Super recently had to adjust downwards the crediting rates it had supplied members for the period October 2009-February 2010, telling members it had received new “information” regardijng the unlisted ‘Target Return’ portfolio.
Meanwhile, Baird said Prime Super “cautiously welcomed” the Government’s superannuation reforms, but did speak out on behalf of many of Prime Super’s un-incorporated employer sponsors.
“Whilst we believe that these changes will do their part to increase the super savings of Australians and thereby reduce reliance on our welfare system, we do have some concerns about the time frame over which these changes will be phased in, and the impact an increase in the SG level will have on small businesses in rural and regional Australia,” Baird said.