The Commonwealth Superannuation Corporation is celebrating its centenary anniversary this year and embarking on a shift to a more customer-centric culture, away from a product-driven one.
“We’re trying to be become a more customer focused organisation… as because of our legacy, we are a product-focused organisation, delivering products that have been added over decades,” chief executive Damian Hill tells Investment Magazine.
“There’s a whole heap about culture that needs to change, and we’re well on the way to that.”
CSC’s first fund opened in 1922 and it now manages 11 super funds for current and former Australian federal government employees and members of the Australian Defence Force. Assets under management has grown to close to $60 billion with over 700,000 customers including 230,000 pensioners.
It provides financial literacy, education and advice to its members and given its unique membership, a range of services to support veterans transitioning out of the defence force as well as retirement products and advice.
“The longevity of CSC reflects that the Commonwealth government was amongst the early ones to recognise the benefit of superannuation for its employees,” he says.
One of the improvements is the complete redesign of its health and claims process to make it easier for customers to navigate, particularly for defence force personnel where mental health issues are rife.
Part of the focus on customers is helping retirees plan their retirement to maintain a comfortable living. “We want to provide the most surety about a pension lasting by using a combination of products, then hopefully customers will actually enjoy a higher lifestyle in retirement with peace of mind,” says Hill.
CSC used detailed internal customer research as well as external research to come up with six key cohorts with different priorities such as flexibility, sustainability of income or maximising investment returns with plans to launch products in 2023.
“We’re looking to put a menu of solutions in place and hopefully help customers be guided to the one that suits them to achieve their goals,” he says.
Hills feels CSC’s unique position as a liability manager rather than an asset manager puts it in good stead to help customers navigate through retirement. “In our investment program, we look at investment governance and are forward looking and we’ve done this for a while. That puts us in good stead as we’ve always talked to customers about retirement,” he says.
Managing the downside
The current roil in global markets has not impacted significantly on customer incomes as CSC is focused on the downside given it invests for both defined benefit and defined contribution schemes. The portfolio is managed through external managers.
“We have always tried to protect the downside more as we see that losing capital permanently is the greatest impairment to retirement incomes and so we’ve always had a skew in our investment returns to try and cut some of the left tail off and protect the downside,” Hill says.
“Because we know our members are generally a bit older, they have higher account balances targeted to the ASFA comfortable retirement standard and as we’re managing against that, we generally take a lower level of risk,” he says. Compared to other super funds, CSC claims it has smaller losses when markets are falling or around 30 per cent downside avoidance but a significant 90 per cent of gains in a rising market.
CSC is also a pioneer in ESG management and investing for many years, underpinned by a belief of a “just transition and not just the transition,” says Hill.
“We can’t have parts of the population… that are left behind. We believe capital has a role in a just transition.”
Cyber security is understandably on the top of the agenda of Hill and his executive team after the recent high profile cyberattacks on Optus and Medibank. The fund has undergone systems testing and staff training to ensure controls are up to mark.
“The nature of our business, and the reputation we hold by carrying the Government crest, is attractive to cyber criminals, therefore we could be a higher target,” he says.
“Social engineering is becoming so much more sophisticated these days, which I’m conscious of as are my executives. We have gone through additional training as we are the highest targets for social engineering.”