Superannuation funds have been too focused on the accumulation stage, meaning there are far too many Australians dying with full balances and not living the “retirement standard they could otherwise afford”.
That is the view of QSuper’s head of product and services Ben Hillier, whose fund won Pension Fund of the Year for the seventh time at the Conexus Financial Superannuation Awards held in Sydney on Thursday night.
“The average pensioner in this country is drawing a pension with their super balance intact,” he said after the win. “They are under-consuming, they are having low volume levels of income and capital, they are not living the retirement they could otherwise afford.
“We can do so much better as an industry to smooth out the returns, to smooth out the longevity experience, and give people a more dignified retirement.”
This year, QSuper’s fellow nominees were giants of the industry: AustralianSuper, First State Super, Sunsuper and UniSuper.
As part of the selection criteria, a high weighting was given to the retirement outcomes an average member might be expected to achieve, the volatility of this outcome and the income it could support.
Hillier said lack of competition was not why the Brisbane-based fund for government workers keeps winning.
“We think there is far more to do. We continue to improve things, we have a fully featured pension product that we continue to innovate around. We pay a cash bonus to people when they retire,” he said. So far, the fund has given $22 million to 14,000 members as part of the program.
“That’s real money helping people in their retirement when virtually every other fund in Australia has the opportunity [to do the same], but they’re just distributing those benefits to everyone in inconsequential amounts instead of giving it to those who deserve it.”
The award was presented to QSuper by shadow minister for financial services Clare O’Neil, who said the fund was victorious because it “scored highly for the breadth of features available in its pension offering, while remaining highly competitive on fees and investments”.
Hillier said QSuper “doesn’t pay attention to what other funds are doing”.
“We don’t have a goal to beat other funds, we actually have a goal to give our members the safest retirement we can provide,” he added.
The $72 billion QSuper first introduced its lifecycle product in 2013, extending the factors determining members’ investment strategies beyond age to include account balances. It is constantly iterating it.
The recent final report of the Productivity Commission on superannuation made terse comments about the retirement income covenant, which would, for the first time, require super trustees to help members reach their retirement income objectives by offering a comprehensive income product for retirement (CIPR).
Challenger chair of retirement income Jeremy Cooper objected to this, calling for a halt to any more reviews of the country’s retirement system.
But Hillier said there was sufficient clarity for funds to get a move on.
“I think the government has done some great things,” he said. “We’ve got tax relief, we have got Centrelink relief, but the industry needs to do more.”
About the awards
Funds are invited to nominate themselves for awards across 11 categories. The committee assesses a broad range of quantitative factors – including fees, investments and member services – and overlays this with a number of qualitative considerations.
The Conexus Financial Superannuation Awards are the only truly independent awards within the sector. There is no entry fee and the winners are decided by a volunteer judging committee that has broad representation from all areas of the industry, including the retail and industry fund sectors, and consumer representation.
Last year, the committee added a 10 per cent weighting to governance in its assessment of the funds’ offerings. This included an examination of gender balance at the board and executive level, director engagement and director tenure.
Conexus Financial head of institutional content, Amanda White, chairs this year’s committee, which agreed that good governance was an important ingredient for fund success.
The other committee members are:
- California State Teachers’ Retirement System CIO Chris Ailman
- FEAL chief executive Joanna Davison
- CHOICE chief executive Alan Kirkland
- Financial Services Council chief executive Sally Loane
- Rice Warner chief executive Michael Rice
- Former parliamentary secretary for financial services Bernie Ripoll
The 2019 Fund of the Year award goes to the nominee the committee believes has the best broad proposition and the highest level of innovation and overall excellence.
The 2019 Conexus Financial Superannuation Awards are sponsored by event partner AIA Australia.