*Principles for Responsible Investment (PRI) Report, 2020
**Superannuation Satisfaction Report, February 2020, Roy Morgan
It has been an extremely challenging year on many fronts and all at CareSuper empathise with our members and employers who have been directly affected by the health, economic or environmental impacts from the serious fires over the summer or the COVID-19 pandemic. During this time our Board, employees and service providers have remained determined and dedicated to act in our members’ best interests.
We achieved a positive return of 0.22% for the Balanced (MySuper) option to 30 June this year, pleasingly outperforming the median return of -0.82%.* This was amid the uncertainty that has confronted us due to the COVID-19 pandemic, causing extreme share market volatility coupled with impacts on valuations of property, infrastructure and other assets.
It’s a testament to our active investment strategy that aims to take advantage of market strength while protecting capital in volatile times. The result? More consistent returns over the medium to long term through different economic and market cycles. Our Balanced option (for both super and pension members) was a top performer over the last 5, 7, 10 and 15 years* and we were again ranked the top fund over 20 years according to independent agency SuperRatings, having returned an average 7.48% per year over that time.**
Our key priority this year has been to support our members and employers, and through this I’ve been proud of the way the CareSuper team has demonstrated its ability to be agile and pivot quickly when faced with changing circumstances. We assisted those affected by the devastating bushfires, and ensured we were well positioned to deliver on the Federal Government’s COVID-19 early release of super scheme. We met the increased demand for financial advice in response to share market volatility and the pandemic broadly, launched the COVID-19 Hub and Early release of super website resources to keep members informed, remained committed to regularly engaging with our employers, and transitioned our events program to a virtual delivery platform. This year we also became one of the first super funds to be certified Carbon Neutral by the Australian Government through Climate Active.
We’re committed to providing high quality products for our members and are consistently ranked by ratings agencies and research companies as a top performer with lower than average fees and superior features and services. We introduced a new age-based insurance design that helps us deliver valuable cover appropriate for members at different ages, and realised savings in our investment fees. We’ve also invested time developing our operating rhythms with Mercer, our administrator, and strengthening the services that Mercer delivers for our members.
There’s been a lot of legislative change to deliver. Some of the most significant include the early release of superannuation scheme — requiring new systems and processes to facilitate payments under the government’s pandemic provisions, and the Protecting Your Super (PYS) and Putting Members’ Interest First (PMIF) legislative changes. The PYS and PMIF laws require us to transfer inactive low-balance accounts to the Australian Taxation Office (ATO), cancel insurance for inactive members, and limit automatic insurance cover to members who are at least age 25 and have an account balance that’s reached $6,000. Members can individually choose to override these automatic settings.
Other legislative changes included a temporary reduction in the pension drawdown amounts to enable pension members to keep more of their balance invested in the fund if they choose to, the extension of the work test, and an increase to the age limit that spouses can receive contributions. We’ve also been embedding the Insurance in Superannuation Code of Practice, which aims to streamline the insurance process for members by ensuring we’re aligned to best practice standards.
Plenty more changes are on the horizon too, including how super funds disclose fees and handle complaints, the Federal Government’s Budget announcements made in October 2020 and the likely introduction of retirement income products following the government’s independent review of the retirement income system.
As an Industry SuperFund, we’re run only to benefit our members. We’re driven by our sole purpose to improve members’ retirement outcomes. While challenges lie ahead and the future may seem uncertain, our absolute priority is our members. Whether you're at the start of your career, in your middle years or looking forward to or living your post-work lifestyle, you can rest assured that our focus is on enabling you to achieve the best outcomes by adapting to the environment and your needs. Whatever the future holds — your super’s in safe hands.
CareSuper Chief Executive Officer
* SuperRatings Fund Crediting Rate survey SR50 Balanced (60-76) Index – June 2020.
** SuperRatings Fund Crediting Rate survey SR50 Balanced (60-76) Index – June 2020 and SuperRatings Pension Fund Crediting Rate Survey - SRP50 Balanced (60-76) Index - June 2020.
On behalf of the Board, I’d like to thank the Executive team and all our employees for demonstrating agility and persistence throughout this exceptional year. We’ve responded quickly and effectively to support our members and employers during one of the most challenging periods ever faced, and I’m proud of the way we’ve managed to achieve strong investment performance results in context of challenging market conditions.
There’s been a lot happening in the super industry, both as a response to the COVID-19 pandemic and the government’s policy agenda.
Arguably the most significant piece of legislation to be delivered this year was the Federal Government’s early release scheme in response to COVID-19. It was important that we played our part to support members accessing their super when their regular income had been severely reduced or had ceased completely. However, the primary purpose of superannuation is to provide a secure and dignified retirement for Australians, and it’s our role to ensure we do everything we can to help our members achieve that. Preservation of superannuation is central to the efficacy of the system and to deliver long-term outcomes, therefore, we express concern at any suggestion that this principle be threatened.
There’s also been debate throughout the year around potentially delaying the legislated super guarantee (SG) increase to 10 percent in 2021 and gradually to 12 per cent by 2025. We believe that in these times of uncertainty, Australians’ trust in superannuation needs to be strengthened, and that the legislated increases should be honoured to secure sustainable income in retirement. Finally, the government has recently released the Retirement Income Review. It confirmed that the Australian retirement income system is effective, sound and that the costs are broadly sustainable.
We’ve also seen increased merger activity between super funds over the past year. This is something we too will look to pursue if we believe a merger would be in our members’ interests and help us achieve greater scale and efficiency. However, we must stay true to our values and the needs of CareSuper members and will balance these considerations when reviewing any opportunities.
Looking forward, we await clear government policies to enable us as a super fund to do what we do best — actively and responsibly invest for the long term, offering cost-effective financial advice to help members achieve their future goals, and providing relevant and valuable insurance cover to enable members to protect what matters most to them.
On behalf of the Board, I’d like to thank Julie Bignell and Claire Keating who both resigned as directors in December 2019. I appreciate the contributions both Claire and Julie made to CareSuper during their years of service and admired their commitment to the Fund’s purpose and strategic direction during this time. In their place we were delighted to welcome Tony Cavanagh and Merran Kelsall to the Board, both having deep experience in superannuation and governance from their prior roles in the superannuation and accounting sectors. I also mention Linda Scott’s appointment to the position of Deputy Chair and Chair of the Governance and Remuneration Committee. We are fortunate to have individuals of this calibre and experience on the Board to serve our members.
CareSuper has a strong 30 plus-year history and we’re honoured to manage over $16 billion retirement savings of more than 230,000 members. There’s no doubt there are significant headwinds facing the economy — however I and the Board are confident that the Fund’s strategy, profit-to-member ethos and active investment management approach position us well to deliver a bright future for our members. Lastly, I’d like to thank our employers who have chosen us as their default super fund, and above all our members who have entrusted us to manage their retirement savings and ultimately make a difference to their lives.