In this Q&A with Investment Magazine, BUSSQ chair Paula Masters discusses the importance of life insurance, ESG and leaving bias at the door.
Q |It’s been 12 months since you were appointed chair of BUSSQ but you had been a director since 2015. How does this experience inform your current role?
A | Those years of experience with the fund before becoming chair have been quite valuable, particularly the opportunity to work with a very experienced and highly regarded chair during that time. I also feel that experience has helped maintain our focus and strategic direction as a board particularly as my fellow directors have been very supportive of my new role. Working as a director for other companies has also allowed me to bring more to BUSSQ as chair.
Q |Super funds have been in the spotlight with the release of the Productivity Commission and Hayne Inquiry’s final reports. How do you think about fund governance now, give the findings?
A | As a fund our perspective on governance hasn’t changed, if anything the findings have reinforced our standing. BUSSQ has always been very conscious of the fact they are managing other people’s money and as such place a high priority on fund governance. The culture of the board is heavily focused on member outcomes and as directors I believe it’s important for us to continue to invest time nurturing this culture within the organisation as it goes hand in hand with strong governance.
What the findings of these inquiries have allowed us to do is take another approach to continuous improvement, identifying shortfalls through gap analysis of both the Productivity and royal commission findings and incorporating these to strengthen our governance structure.
Q |The value of life insurance in super has been questioned. Do you think it was justified?
A | For our membership base insurance within super is very valuable. Due to the nature of work within the building and construction industry numerous occupations are classified as high risk and uninsurable. As a result, many of our members would have no insurance without access to insurance through superannuation.
We hold concerns that some of our most vulnerable members may accidentally become uninsured as a result of the pending insurance changes because financial literacy is low and not a priority for our predominantly male, blue collar membership base. We are also concerned as the cohort set to lose their insurance cover includes the demographic we receive many of our suicide related death claims from.
With 20 per cent of our death claims suicide related, how will these members’ dependents be supported without insurance coverage? With these concerns it is a priority for us as a fund to carefully communicate these changes so our members can make an informed choice. We also strongly believe in providing our members with ongoing education about their insurance options and access to advice so they can ensure their insurance is fit for purpose.
Q |What are some of the practical ways the fund provides transparency to its members, and have you made any changes during your tenure?
A | Our brand quest is ‘making the difficult easy’ and this drives transparency in our communications and member interactions. We aim to keep our products simple with no hidden fees and the information we provide to members equally simple to help them understand their chosen product so they can make the most of its benefits. We also meet our members preference to speak with us face to face with our robust member servicing program.
The team is taking the fund’s mobile superannuation centres to an increasing number of workplaces and construction worksites providing members with the opportunity to learn more about their super and speak with us one on one. During my tenure, we have improved technology within the fund including a soon to be released enhancement to our member on-boarding platform which will simplify the process and provide members with more flexibility in how they interact with us.
Q |The Modern Slavery Bill 2018 was passed in Australia parliament on 29 November. How are you identifying and responding to potential risks in your operations and supply chain?
A | We strive to partner with and purchase goods and services from Australian companies where the industrial relations system ensures workers are fairly treated and paid. Our internal audit processes also help us identify and mitigate risks across the business in this area. We will be reporting against the new requirements of this bill in the 2020 year and are currently developing our procedures to facilitate this.
Q |What is your commitment to ESG and how does this translate in a practical way to your fund?
A | In conjunction with the Fund’s investment consultant our board and internal Investment team have undertaken workshops to identify areas of concern in this area and to formulate a philosophy to incorporate into our investment process. Our investment committee is committed to improving the Fund’s ESG effort and we have developed investment beliefs that focus on investing in a responsible and sustainable manner. To incorporate this a framework has been developed to embed ESG into the investment process both for new investments and to improve engagement with our existing investment managers and assets.
The areas of immediate focus for the Fund are improving the engagement with our external investment managers with respect to their approach to ESG and confirming our expectations. A regular dialogue and reporting on ESG will help us achieve our ESG goals. The trustee firmly believes that taking active responsibility for the portfolio will help identify and manage risks and enhance returns for members over the long term.
Q |The post-retirement phase of a member’s life is increasingly taking centre stage. What are BUSSQ’s plans in this space?
A | As a fund we view this shift in focus from accumulation to retirement income as a positive one. We have been very active in this space for some time delivering for our members a strong suite of retirement products, including an active Term Allocated Pension product. We have also enhanced our offering for members in retirement with an Income account bonus paid upon transitioning from accumulation to income account.
Our new Centrelink Assist service has also been designed for these members. We recognised the importance of supporting them through the processes of obtaining their government pension and benefit payments as for many members this forms a substantial component of their retirement income. To further provide for members in this space we are actively investigating the roll out of a product that will support members seamlessly throughout their lifetime and awaiting the outcomes of consultation on the proposed Comprehensive Income Product in Retirement (CIPR).
Whist we support the introduction of measures seeking to deliver the best retirement income design and outcomes for members we don’t see CIPR in its current proposed form with a longevity aspect as being advantageous to our member cohort. Male building and construction workers who form the majority of our membership base have a shorter life expectancy than the general population. We feel pooling these members with other occupations and genders would put them at a disadvantage.
Q |In 2017 BUSSQ set up Skylight Financial solutions. How important is it that funds provide financial advice?
A | It is important for funds to provide financial advice to their members. Having the best superannuation product isn’t enough if members are not making the right financial decisions for their retirement as their circumstances change through their life. It’s in members best interests to provide them with a great super product and access to advice that will assist them make the most of their retirement savings. Skylight was created by BUSSQ to provide members, and those working within the building and construction industry, with the advice they needed at an affordable price.
We found that to have the funds for retirement members were needing a wider scope of financial advice than BUSSQ was able to provide and that price was a key barrier to accessing this advice. Skylight is able to provide this advice to members at an acceptable price point without commissions or ‘fees for no service’ that can drive prices beyond that our members are able to afford
Q | How would you describe your leadership style?
A | I aim to lead by example and tend to set quite high standards for myself. In my current role I feel it is important to be inclusive and encourage participation and input from across the company. I believe this helps build commitment and achieves consensus towards our strategic objectives. I value fairness highly and believe that this together with my thoughtfulness play into the decisions I make.
Q | One of your predecessors Bob Lette spent 27 years as chair of the fund and been on the board since the date of its in 1984. What have you learned from him?
A | Working with Bob has influenced how I’ve approached my position as chair on the BUSSQ board. In my first years as a director the strong relationships I held, not just within the organisation but across the industry, become more valuable and expanding this network with Bob’s connections has been helpful. Sharpening my ability to separate work for BUSSQ from all else leaving individual bias at the door was also beneficial. Bob was good at guiding discussion to facilitate this as well as listening to a wide range of perspectives. To keep your sense of humour is also something that I learnt from Bob!
Q | At BUSSQ, what is the most important conversation you’ll have around the board table this year?
A | Conversations around the new Protecting your Super legislation I feel will be some of the key discussions we will have this year. How we implement these legislative changes whilst we continue to concentrate on the strategic direction of the fund. As we are strongly focused on the best interests of our members how we implement this new legislation in a way that doesn’t disadvantage our most vulnerable members will be important.