The timing of Kevin O’Sullivan’s appointment is auspicious. A technocrat, an actuary and a maintainer of outsourced schemes at Russell Investments, he has arrived after most of the work around Stronger Super had been put in place at UniSuper. Well placed to do the assessments around product development, he would appear to be chosen for a new phase in the fund’s development.
Yet, he rejects the label one media report gave him as a new-broom chief executive, not least because it implies that there was something wrong with his predecessor. He describes his key goal as to “continue on the great success of my predecessor” and that he is more of an “incrementalist CEO”.
In this guise he will continue the exacting members’-best-interests focus that he credits Terry McCredden for developing.
He is “good mates” with McCredden and has this perspective on the differences between them: “Terry has run super funds for 20-plus years; he started up Telstra Super, so clearly he has looked after big funds. I have worked with some of the country’s top executives as a consulting actuary. In my past role I was responsible for managing big corporate funds for top ASX-listed companies including BHP and Telstra.
“Often I was not the last port of call in making decisions for my clients, whereas Terry had this innate ability to be the go-to guy. In terms of people management, Terry made his mark.
“I have a similar management ethos. In terms of pure technical skills and competencies, Terry would agree that my actuarial experience will assist me in dealing with some of the fund’s trickier technical requirements.
“I bring to the role strong product-based knowledge that positions me to participate more in some discussions than Terry would.”
One of the new product lines that UniSuper will be exploring is the possibility of a fund that offers members an alternative to the current accumulation fund – something that sits in between defined benefit and defined contribution.
O’Sullivan also floats the idea of reviewingUniSuper’s MySuper re-badged balanced fund. “Everything is always on the agenda. We should always be thinking what is in the best interests of members, whether for competitive reasons or as new ideas arise.”
Another commercial prospect is the launch of a direct investment option. O’Sullivan is committed to this being judged purely on a considered decision based on whether it is in the best interest of all members and subject to a full debate, even though he admits it would be easy for a fund the size of UniSuper to do.
“Should a super fund have a DIO to stay big? By being bigger it can shift its expenses across a bigger base maybe, but just saving membership is not necessarily a good reason to introduce a DIO.”
He understands that the attraction of selfmanaged super funds needs to be matched with clarifying for members the benefits of being with a top-five fund. And he questions how popular an inhouse solution will be.
“If, say, 10 per cent of members want a product like that and only of half of those choose it, is it in all of your members’ interest?” The matter will be discussed atUniSuper’s February strategy meeting along with other innovations.
“I do feel there can be improvements to the way that we deliver superannuation to members in Australia. Once we get all this legislative stuff out of the way, we join the collective of other funds asking whether there’s a better way of doing it.”
O’Sullivan is coy about overstating it, but UniSuper is exploring the possibility of a third-way accumulation fund for its members. This could offer more certainty than a standard defined contribution scheme, but would have less of the liability
risk for employers than a defined benefit one.
Best of the best
“What I want UniSuper to be is best practice and best practice is not best practice Australia, it is best practice global. So, getting information about defined ambition in the UK or what is happening overseas is really important for me. UniSuper’s goal is not just to be the best scheme for university employees in Australia, we also want to be the best super fund for the size that we are in view of global trends. If there’s something happening in Denmark that is best for our members, then we should think about it.”
If such a fund is created, then it will be offered, at a price, as an option for members or as a default. He partly justifies the exercise by referencing QSuper’s idiosyncratic move to offer what is best for their members, with their segmentation approach to members investment risk.
O’Sullivan is buoyed for this voyage of exploration by the strength of the UniSuper board, with its professors and former heads of financial services companies such as Chris Cuffe, Ian Martin and Melda Donnelly.
“It makes my life easier to know I have brilliant people I can take ideas too. They have the potential to explore big ideas.”