Julie Lander has spent two decades as CEO of CareSuper and has seen a lot of changes in her time, not least among them the recent Your Future, Your Super legislation.
She joined the fund a week after 9/11 happened and was at the helm through the GFC and now Covid.
But she said, if there was one thing the industry needed to do right now it was to “nail the purpose of super”, something that in her mind is unequivocal.
“(Super) is a long-term savings and investment strategy to give you an income in retirement. I think we’re getting so much conversation these days about other uses for Super, that are not necessarily useful. And, super is not the panacea for all ills,” she said.
But if there is a good outcome to be had from those conversations around whether folk should be able to access their super in times of crisis (like Covid) or to use it for a home deposit (as has been suggested by some in political circles) it’s that people are becoming aware that they actually have super and are becoming more likely to engage with it.
“I think it’s partly marketing and communication,” she said, “but it’s also events that we might look at as being bad, or negative events, but the silver lining is that they actually do focus people’s attention on Super.”
“When they were able to draw on their super for Covid payments, they definitely knew where their super was,” she added. “Not that I think that that sort of temporary crisis is necessarily the best use of super.”
Lander said that people were on the whole pretty disengaged with super 20 years ago but as balances had grown over two decades, they now realized this was actually something quite substantial and that it had the potential to change their lives or at least that it was a nest egg they could rely on.
“But now we see the, retirement income covenant, where the government, quite rightly, is saying, ‘okay, let’s have a bit more attention put on the drawdown phase because that is the ultimate purpose of super’,” she said.
Lander maintained it was super’s potential to “change people’s lives” that has kept her motivated over the years.
“When I started, we had a billion dollars [under management] and about 20 people on the staff. Today, we have $20 billion and more like 150 on staff,” she said. “So what [also] kept me motivated and interested is seeing and managing that change, plus the legislative change[s] and making sure that we’re doing our absolute best by our members.”
A Boutique fund
She said her vision for the fund was for it to remain a boutique fund with a distinctive value proposition for its target market of office-based “professionally-minded people who value quality”.
It was not Lander’s intention for CareSuper to become a mega fund but she did say she could see the fund growing to around $50 billion of AUM through mergers and organic growth.
“We think we’re actually in a sweet spot and we can invest in a very sort of agile way. And we want to maximize that and that does differentiate us a bit,” she said.
“But we’re definitely open to mergers with like-minded funds that have the same values and purposes, our first preference would be to look to mergers of similarly sized funds or smaller funds rather than moving into another mega fund because as I say, we want to actually maintain that distinctive value proposition.”
Speaking about the industry more broadly and the new Your Future, Your Super regulations she said probably a greater challenge than stapling was the new APRA performance test, hastening to add that her fund was well ahead of the benchmark so it wasn’t an issue for CareSuper per se.
“I want to be clear that we support the introduction and implementation of fair and appropriate performance tests as a way of protecting the best financial interests of all super fund members but that the way it has been introduced will lead to outcomes inappropriately favouring some funds over others, especially the way operational costs have been included,” she said.
“[The] test needs to come with implications for underperforming funds and that having to communicate to their members is appropriate. However, the actual letter is, in my mind, fairly harsh and it confuses options with funds,” she added.
“I also wonder whether it will achieve what it sets out to do. The first priority of funds is to deliver risk adjusted returns over the long term and through different investment cycles that produce a real return (exceeding inflation which is why we have CPI+ objectives with different risk measures). That should not be lost. The fact that the test is retrospective and over a period when funds did not know about this test is also interesting (and why it could be considered as harsh).”