UniSuper, the limited offer default fund for university employees, has taken a half-step towards becoming a public offer fund, opening its doors to former members, a wider network of members’ families, and a broader pool of tertiary-education workers.
The $60 billion industry fund announced the launch of its new ‘Personal Accounts’ product on November 22, 2017.
The Australian Prudential Regulation Authority approved an application by UniSuper earlier this year to vary its Registrable Superannuation Entity (RSE) licence from non-public to public-offer. The fund has subsequently obtained an Australian Financial Services licence from the Australian Securities and Investments Commission.
Despite now being legally allowed to open up the fund to the general public, however, UniSuper has opted not to do that.
Instead, the fund’s accumulation-style super product, which was already available to members’ spouses, is now also open to members’ children, in-laws, cousins, grandparents and “blended families” living in Australia. Step-children and foster children of default members are now eligible to join the fund. UniSuper will now also allow former members who previously left the fund to return. A broader range of workers affiliated with the higher-education sector, including those employed outside of universities, are now also invited to join.
They asked for it
UniSuper chief executive Kevin O’Sullivan denied the expansion was driven by a need to expand the fund’s membership, which stands at 420,000, saying it was instead a direct response to ongoing requests from members “over the years” to offer UniSuper to their broader family network.
“Over the years, many of our members have told us they want to share the exceptional value, strong long-term performance and quality advice they receive through UniSuper with their broader network … so we’ve made this a reality,” O’Sullivan said. “We’ve regularly reviewed requests from members who have regretted their decision to leave UniSuper. Members may have not had as good a customer experience with their new fund, or they have greater confidence in how they expect UniSuper to perform in the future.”
O’Sullivan told Investment Magazine the fund has been “thrilled by the level of interest” in the expanded access to Personal Accounts offering since the soft launch in early October.
The fund has received at least 500 online applications, mainly from retail funds, in the last six weeks and 92 former members are hoping to return to UniSuper, he said.
“I’m anticipating 60 to 80 applications a week…This initiative was undertaken as a service initiative based on feedback from our existing members about the narrowness of the spouse offer and the complexities around opening an account.”
O’Sullivan said he did not expect the expanded Personal Account offering to dilute the fund’s core higher education membership, as spouse accounts now make up just 2 per cent of the fund’s base.
Strategic growth
UniSuper has a strategic advantage due to its higher than typical average balances for members. It is the default fund for 37 Australian universities and one of the few industry funds still offering a defined benefits division.
Good economies of scale had kept the fund, which has 16 investment options, from opening its doors to a wider circle in the past but the expansion was about giving members more choices, O’Sullivan said.
“We’re still strongly focused on the higher education sector and UniSuper staff on campuses throughout Australia,” he explained.
O’Sullivan said historical long-term performance and lower fees were reasons members were advocating for their extended family to join.
The UniSuper investments team, led by chief investment officer John Pearce, has consistently produced some of the highest annual returns across the industry over the last decade. The fund won the prestigious Fund of the Year honour at the 2017 Conexus Financial Superannuation Awards (Kevin O’Sullivan pictured above at the Awards).
UniSuper’s move to attract more members from rival funds follows a move by QSuper, the $70 billion default fund for Queensland public servants, to go public offer from July 1, 2017.
