Superannuation investment in the UK is expected to more than double over the next decade in a boon not just for the retirement savings of everyday Aussies, but also the British economy, at a time when the world is grappling with political turbulence. But governments can still do more to give the stewards of pension capital the confidence their investments will deliver members the best returns.
Australia and the UK have very different pension landscapes, but the latter might have a leg up on the land down under when it comes to performance testing and retirement advice and defaults, writes David Bell.
The CIO of the $413 billion AustralianSuper says the fund is quick to terminate underperforming internal investment strategies but defended its policy of not disclosing their returns. He also believes that the rise and rise of passive investing could be an existential threat to active managers.
Career regulator Helen Rowell, who was arguably the public face of APRA’s push for superannuation consolidation during the Morrison government years, will take the reins as chair of Australia’s second largest fund. Rowell, who has served on the ART trustee board since last year, follows a string of high-profile executive and board changes at the mega-fund.
A total portfolio approach is widely reported as being more commonly adopted within the Australian superannuation sector. Mark Neary, product leader for BNY Data and Analytics, Asia-Pacific, says this raises questions for a fund’s data strategy, technology and service partnerships as they work to empower their human intelligence with artificial intelligence.
Insignia Financial-owned MLC Super has a flashy new marketing campaign that it hopes will position it as a retirement leader. But it also arrives with a big uplift in its member servicing and onboarding capabilities that could cause some concern among the profit-to-member set.
The Labor government has backed down from several controversial features of the high-balance superannuation tax it introduced two years ago, cancelling the plan to tax unrealised gains and introducing indexation to the $3 million threshold. The adjustments, which will delay the start date of the new tax regime by a year, were slammed as “publicly humiliating” by the Coalition.
The mismatch between super’s rhetoric on climate-related investment and the action they actually take is “not sustainable”, writes Jeremy Cooper. One solution could be the most significant shift in portfolio construction since the rise of modern risk diversification.
Rolling out a total portfolio approach is rarely a linear process, as even its most experienced practitioners have warned that without careful resistance to old language, culture and structure, asset owners can easily slide back into the “comfort” of strategic asset allocation.
Industry fund-owned asset consultant Frontier Advisors has lifted out State Super’s investment team to create what it calls an “independent CIO” business for smaller funds that are being deserted by custodians or looking to decrease the operational risk of owning their own investment function. Frontier CEO Andrew Polson says they want to create an alternative to the established implemented consulting and outsourced CIO models.
A new paper published by The Conexus Institute has found that super funds’ climate-related investment activities have been patchy, and that their impact on performance, while hard to measure, has almost certainly been modest.
Following the success of a digital tool to help members maximise accumulation, the $200 billion Aware Super is set to launch a new tool to help members maximise retirement income and encourage higher draw-down rates. The tool allows members to think about retirement at a household level, and to consider income sources outside super – including Age Pension eligibility – all without relying on Tranche 2 of the DBFO reforms being passed.
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