What a week the world had from September 10 to 14. Most people watched their televisions with a horrid fascination of the events that unfolded from September 11, and almost in the world scheme of things, there appeared an almost cursory mention about Ansett being placed into receivership.
This issue, at first, struggled to gain any airtime, but that soon changed as the airline and its subsidiaries suspended operations on September 14. One could say that as an ordinary member of society, then as an employee and as a member of a super fund, and finally as a trustee, that this was most definitely one of the worst weeks of my life.
Perhaps the ultimate test for any super fund, and in turn, for any trustee, is the possible closure of a fund. Although the closure of the Ansett Flight Attendant’s Benefits Scheme (FAB) Scheme is not a condition that most trustees find palatable, it is an obvious natural outcome for defunct sponsoring employers.
The truest test for all systems that are associated with a fund is the wind-up process. As a trustee, you are heavily reliant on the ‘systems’ and records, and the reports that flow from them. I am not sure how many trustees have tested their systems in the ultimate sense and tested the finite details of the processes. One might say that an annual review should pick up any errors or deviations, which is true in a holistic sense.
However, when one goes that extra step and prepares at least to pay out most, if not all, benefits, you are faced with addressing all outstanding issues however minor. You cannot fall back onto a resolution to ‘fix’ that outstanding issue in the following year.
When the status of an employer is not known, there are an infinite number of scenarios. But perhaps the worst thing to hear is nothing at all. You are then faced with all scenarios, both positive and negative, and planning becomes as infinite as the possible outcomes.
If reliance on the systems and processes becomes heightened in the uncertain environment, then your reliance on your support staff or consultants is even greater. As you would imagine, surrounding yourself with the very best advice and support is paramount in this environment.
The FAB Scheme, along with the rest of the Ansett plans, recently awarded our administration to NSP Buck and the transfer process from AMP was still under way when September 13 came around. To say this has been a test for NSP Buck is an understatement. To put this in perspective, you must remember that NSP Buck was trying to complete the transfer process while at the same time complete the annual review and now it has to deal with the possible closure of the five funds involved. It has been very reassuring to see the support and professionalism that NSP Buck has demonstrated through this process.
This is also the time to test all those great decisions that you made about all your service providers. The fund’s legal adviser suddenly becomes your best friend (your decision, not their’s). Your asset consultant is not allowed to take a holiday. All of a sudden you really want to see your auditors (daily, if possible), and the actuary is not allowed to leave the office (for any reason!).
While the board carries all the responsibility for its actions, you do have to rely on, or at least consult with, many individuals. Do you have a good relationship with these people and do you trust the information they are offering? You better have, when the regulators are visiting your office weekly and sometimes daily.
Communication takes on a whole new look and it’s very hard to put a positive spin on things with the events in the US being reported in such detail. The investment markets started rating headline news in just about every news bulletin and to advise your members that things are not ‘too’ bad, is just not possible. As if the investment return is bad enough to report, we are also battling the reports of the future of the employer and, in turn, the members’ own future.
The general media has made reports about the ‘Ansett Super Fund’ and the reports, while only partly true, leave out the fact that Ansett has five separate funds. The media in general is tarring us all with the same brush and it is frustrating in the least to spend half of my time answering questions and reporting to members that these reports are not about FAB.
Some reporters surely failed Super101 at school. For example, one had to have the difference between a defined benefit and accumulation scheme explained and then didn’t report any understanding of the difference. It appears that if it involves the name Ansett then it gets reported, especially if it is bad and this makes life in a communication sense near impossible. But whatever the case, we are sticking with the three Cs: Clear, Concise and Cost effective.
Utilisation of the Internet and using a friendly network of contacts remains the quickest form of communication. When one counts the costs of a mail-out, you quickly learn that this can only be used for the most urgent and necessary of communications.
Communication at a board level has also taken on a whole new look, especially in regards to urgency and timeliness of information.
The current state of FAB is very much business as usual, but it has the added dimension of possible dramatic changes, and the information for this must be delivered with the utmost urgency. Hence, the use of e-mail has become almost indispensable.
A defined benefit scheme cannot last without a sponsoring employer and FAB’s board is preparing for this scenario as well. It would not be appropriate to detail those plans here, except to say we are conscious of the fact that the ultimate choice for members and their best interests would be best served if they also had the ‘option’ of not withdrawing their benefits in the current investment climate.
Finally, I cannot underestimate the importance of a good working and understanding relationship of the entire board. This is no time for agendas, perspectives or any other extraneous diversions to be entered into.
It would be hard not to comment on the issue of good governance. As a trustee, I have heard from many people about the issue of the representative system in relation to super fund boards. You would imagine that I would be very biased, especially in the current situation as an employee and as a board member. However, I could not imagine that you could convince any of the members of the FAB Scheme to trade the ‘inexperienced’ member trustees for the more professional board member, perhaps from Air New Zealand?
At the end of the day, it is the members who should decide who governs the running of their retirement savings. It is surprising that the members have not been included in this debate, and perhaps it is time they were.
