Leeanne Turner started working in public service pension schemes before the superannuation guarantee charge was made compulsory and has seen most of the big changes since then first hand. One of the most significant was at the Commonwealth Superannuation Scheme, which in her time switched its control from a commissioner to a board of trustees.
Her path to MTAA Super, the super fund for the motor trade, has passed through superannuation roles at the Department of Defence and then AV Super. She has now been at MTAA Super for five years, the last 18 months the chief executive.
Turner has a close affiliation to the motor trade as her grandfather was employed in it, her son is a motor mechanic and her brother is a panel beater.
She believes MTAA Super is a fund that will buck the current trend towards merger and one of the measures of this optimism is her fund’s move to innovate, with the launch of its own annuity product developed alongside MetLife.
In January MTAA lauched RetireSafe, an annuity that gives a set income for life for retirees, but comes with more flexibility than the typical annuity. It allows the owner the option of withdrawing a lump sum, to benefit from the growth of the underlying investments, and the option for a pension to be paid on death to a spouse. Take-up so far has been low.
Why did you launch MTAA RetireSafe?
We have been working on this for two and half years. We looked at the products that were out there, and issues where they did not address concerns and have looked at ways to plug those holes.
It is expensive because there is a guarantee. That is what people have to understand, if you want certainty it does not come cheaply.
The launch of annuity is the start of a journey, rather than a destination. It will not be the be all and end all. I expect further innovation. We have to start thinking outside the square for retirement income.
Will you launch a direct investment option to cater for members who seek a self-managed fund?
People are moving to self-managed funds for a variety of reasons; some are moving for good, informed, reasonable, logical reasons and some are not. You have to think why they are going and if there is something we can offer to give them comfort on that.
We are certainly looking at the direct investment option, but I could not say we would definitely do it. We cannot add every bell and whistle. We have to weigh up whether we are putting in place something that costs a lot, which is going to be spread across the membership, but is only going to be taken up by a small number. We will quiz members on this.
To look at anything innovative, to add another product, there has to be a good strong business case and that is what the trustees are going to make their decision on.
Why have you stuck to a one-size-fits-all default for MySuper?
For most industry funds, the current default pretty much meets the requirements of MySuper. So it will be fairly seamless for our members and employers. The sorts of people who will go into it are the supposedly disengaged; some are quite happy to be defaulted. That does not mean we have not taken the opportunity to look at our investment strategy and fees to make sure we are comfortable with that.
As we are living a lot longer, it is relatively simple thing to say you should be more conservative as you approach retirement age. But maybe you should be a bit more aggressive as you approach retirement, so long as you have an understanding of the risks approaching it.
With several members of your family in the motor trade, how does this help in your role?
I can visualise and understand the membership from a personal perspective. It adds another dimension to my decision making. Because you have got that personal element, it is like a ready-made focus group; I can go out and test the rhetoric on them.
My son is a great litmus test for me. I guess unfortunately at the moment, he is of the demographic that says “Superannuation is so far away; do not bother me about it”. In fact the correspondence comes in and he says, “This is for you”.
We have a large cohort of young males who are completely disengaged and do not want to know about superannuation. Equally, we have the cohort, like my brother, nearing retirement, who are saying, “Gosh, have I got enough money? Why are there so many changes? How am I going to cope?”
If there is one clear message to get through to the younger age group, it would be the power of compound interest. Then you get them to understand the need to put money away, but at a young age they are not interested.
What is MTAA’s policy on social media?
In the age and environment we are in, we cannot ignore social media, but does that mean we have to be in every new type of media. I asked my son how he would feel about SMS messaging about super or on Facebook. You would not want to hear the exact answer he gave. He basically said, “Get it out of my face. That is my space. If I want to hear about super, I will talk about it.” A lot of people in their 20s do not want to be communicated by that means because they are disengaged.
Should we take the politics out of superannuation?
The council of super custodians is absolutely a step in the right direction to get bipartisan support for longer term thinking. This constant tinkering makes people lose confidence in the system; it makes them put off strong decisions because they do not know what the government is going to do next.
When Costello took tax off pensions at the age of 60, I thought this would not be around when I am 60, because it is just not sustainable. The same [applies] for the decision to let people put in up to $1 million. That is what happens when you get tied to a political cycle, so we have to get long-term thinking and bipartisan support.
The composition of the council will be integral to its success. You need representatives from across the industry. It cannot be held hostage to the whims of the parliament of the day.
What one piece of recent legislation would you change?
The one element I would have liked to have seen was the reforms come in at a more manageable pace.
Down the track we might find unintended consequences just from the sheer breadth of change that has been put in place. There has been a lot of reform in a very tight space of time. It might be in two, three, four or five years that we find out what those consequences are.