For as long as there has been the Superannuation Guarantee, Gerard Noonan has been involved with guiding the superannuation returns of his fellow journalists and media workers.
The former editor of the Australian Financial Review traces his involvement in superannuation back to the beginnings of the old JUST scheme – the Journalists Union Superannuation Scheme – in the early 1990s. Somewhere along the way, Noonan swapped jobs. He moved from a working journalist with an involvement in superannuation to not only guiding his colleagues’ super as chairman of their fund, but immersed himself in the whole industry funds movement.
Today, in addition to his longstanding role as chairman of Media Super, he is the vice president of AIST and a strong presence in the industry. It has been a significant second career. Media Super, after merging several funds – most notably Print Super – now has around 110,000 members and has just clocked over $3 billion in funds under management. It has also been a solid performer, delivering around 8 per cent per annum since inception.
And yet, these are difficult days for the media sector, with members in both journalism and print losing their jobs, many of them recreating themselves as contractors and freelancers or leaving the industry altogether.
Super in a sunset industry
Around 1900 jobs were lost in the most recent of several successive cuts at Fairfax Media, and News Limited will probably shed around 3000 jobs in the short-to-medium term.
“We have three main pillars to our fund, and they are journalists, those working in the print industry – and that increasingly includes digital graphics – and also acting, arts and entertainment,” says Noonan. “The classical ink-under-the-fingernails area has been really badly hit, and you wouldn’t really think of acting as a strong area, but that has actually been a growth area for us.”
Media Super, says Noonan, largely transformed to a public-offer fund in order to accommodate freelance members, which it was not able to do previously as they had to have an employer as a sponsor. While the fund has not seen a significant drop off in members or even the number of employers, it has seen changes in contributions, with members’ more spasmodic employment situations reflecting in different and varying contribution patterns.
With such flux in the industry, and many senior members with larger superannuation balances being offered redundancies, a major issue has been the drift to self-managed funds, a sector which Noonan is highly critical of. “What we do is deal with this with as much love and attention as we can possibly muster,” he says. “People are in the state of leaving very long-term employment and, if they have a large sum of money, they are very sensitive, they feel a bit bruised from leaving something they felt passionate about and was a large part of their lives. “So, they are going through a life change and just receive a lump sum, which is probably the second most significant piece of wealth they will ever have after their homes. And I see them as vulnerable to the friend at the barbeque – who might be an accountant – who is telling them they need to form their own fund.”
Part of Media Super’s response has been for financial planners – who are employees of the fund – to go into the workplaces and talk the issues through with staff who are have taken redundancy. “Personally, I feel that all these claims about ‘controlling our destiny‘ made by the SMSF sector are people selling the sizzle and not the steak,” says Noonan. “We already offer significant choice in nine options over equities, cash and low growth or high growth, and I think that’s a better answer for people than turning their retirement savings into a leveraged property vehicle – which is the model the industry is pushing them towards.”
As a fiduciary, Noonan is also passionately concerned with issues of investment strategy. Media Super’s investment committee meets monthly and includes a wide range of experienced people, including a top-100 corporate treasurer.
The fund also takes “robust advice” from Frontier Investment Consulting and while there have been debates over strategy, the resolution has been to keep the balanced fund at 70 per cent growth and 30 per cent defensive. “We are a CPI-plus-target fund, which is 2 per cent at the more conservative end and 3.5 per cent in our growth fund,” he says, before going on to say that Media Super does benchmark itself against competing industry funds, and also against various market indices.
“There’s a lot of talk about volatility and how the appetite should be lower, but I have a more nuanced view and I think we are at risk of the classic situation where people think that the bottom of the really long down market is going to go on forever, and actually doesn’t. “So, there’s a tendency to de-leverage and de-risk, and everybody is looking around the world and seeing doom and gloom, and I’m a bit less inclined to that view.”
Like many other senior members of the superannuation industry, Noonan was in Melbourne recently when Mercer released its global pension index, a presentation which has prompted strong debate. “I was struck by the conversation there and the debate about Australia is an outlier in asset allocation with the 70/30 split, and there was an implication that this was wrong or risky,” he says. “My response is why would you look around the world when our own system is world class, when we are moving from the fourth largest to third largest pool of retirement savings in the world.
“Why do we need to be more like the Dutch or the Americans or the Danes, or become a basic bond fund? I think we need to be a bit bolder than that, and I think we should hold our nerve, and if we do that I think we will be well rewarded over time.”
MySuper and a Fairfax future
Noonan’s future plans for Media Super involve the possibility of taking over corporate funds at major employers such as News Limited and Fairfax, which together have schemes with a combined $1.5 billion or so under management. He sees the advent of MySuper, for which Media Super has been one of the earliest funds to get its documentation in order, as a catalyst for change in this area.
“We are talking quite intensely with Fairfax, and they are a media organisation with quite a lot on their plate and I would suggest the last thing they need to worry about is a pension fund in the run-up to MySuper,” says Noonan. “There are a lot of synergies there. We have a lot of Fairfax employees in our fund, and we are also on the Mercer platform like them, so that would make any transition easier.
“Personally, I believe that MySuper will shake out the corporate sector, because having a fund for corporates will be very hard to do in any way other than to outsource it.”
While the industry might “groan” under the weight of regulation, of which MySuper is the latest wave, Noonan remains a strong advocate of the Australian system. “I’ve been chair of one or other of the funds in the media sector since the early 1990s,” he says. “And in that time there hasn’t been a single default in the not-for-profit sector, and half a trillion dollars has been amassed in that time and that tells me we are well regulated. We might complain about all the regulation, but on the other hand, from a fiduciary perspective, it’s been a stellar outcome.”