Commonwealth Super Corporation (CSC) has shared how the fund is progressing, midway through a five-year transformation project.
Speaking to Super Review, chief customer officer, Adam Nettheim, said the fund was three years into a five-year transformation program to improve member outcomes that had been driven by the increase in defined contribution (DC) members the fund was gaining.
The fund had been providing superannuation services to current and former Australian government employees and Australian Defence Force (ADF) employees and veterans for over 100 years.
“Most of our contemporary members are DC clients so they need a lot more from us than the old DB [defined benefit] ones. DC isn’t the greater percentage, it is roughly 60/40 if you include the pension clients, but certainly DC clients are becoming a greater part of our membership,” Nettheim said.
“[This change] means we’ve got the complexity of the super fund changing but also the complexity for the employer because most of the Federal Government agencies don’t understand this DC thing. So it’s a real shift for them as well so we’re trying to take both the individual member and their employer on this journey. It’s a really unique situation for CSC.”
This would reduce admin for the fund and customers by using Iress, which owns Acuity, as its single platform operator compared to using multiple ones.
"The first part of the investment is around platforms, we’ve signed up with Iress to move to a new platform. The plan is to get to a single platform which is all operating on Acuity and operating the member interactions through Salesforce and that will reduce the number of back-end platforms and the number of customer platforms,” Nettheim said.
“We are heading in the right direction from a technology space and trying to parallel that with some work around process and human capability.
“Secondly, we want to have a very intentional customer strategy which looks to determine and engage with the right partners for the right part of the members’ journey. We want to own the members’ journey but it does not necessarily mean it’s going to be us doing that as there are other providers out there who can do that so much better and we should leverage that.
“The customer strategy is my priority for this year, understanding our member segments and what different things they need from us. What do we need to internalise and how can we set ourselves up to deliver that strategy over the following years? That’s probably my essential for 2023.”
Merger with AvSuper
Earlier this year, the fund announced a proposed merger with AvSuper would not be proceeding after 10 months of due diligence. AvSuper had since announced it was exploring options with Australian Retirement Trust (ART) instead.
While the two funds were viewed as a viable merger partner given the connection of CSC’s ADF members and AvSuper’s aviation focus, the decision was taken that it could not be accommodated within the existing policy and legislative framework.
While Nettheim did not rule out a merger, he said it was unlikely to be in the near future while the fund was undergoing the transformation.
Unlike other super funds — Nettheim previously spent eight years at QSuper — working with Government departments meant it had less control of trustees.
“The challenge is the connection to Government means we don’t have full control of our trustees, the Government agencies own that. So we have to work very hard and very intentional with those Departments of Finance and Defence to ensure we can present products and opportunities for our members in the same way as any other fund,” Nettheim said.
“It doesn’t hold us back but it does mean we have to take a different approach to how we might make changes and what those look like.”
Asked by Super Review about APRA’s intention to create mega funds and encouraging funds to merge, he said it was not the ideal solution for every fund (although some had the decision taken away from them for performance reasons).
Some funds such as AustralianSuper ($271 billion in assets under management) and ART ($240 billion) were becoming so large, he said, they had moved beyond mega funds to be ‘giga-funds’.
“It’s like saying to someone, ‘just lift 200 kilos’. Some people could do it but lots of people would struggle and be unable to do it. I get APRA’s intent and I think they do have an idea of how difficult it is but there is a lot of effort involved, just in the due diligence alone whether you proceed or not and that takes away efforts from other important pieces of work,” Nettheim said.
“I hope the balance can be found of the right amount of funds to merge with the right capacity but without dropping the ball on anything for their current customers.
“A monopolised market isn’t good, we have seen that in other sectors where there are too many big players.”
He also noted the Association of Superannuation Funds Australia (ASFA) had set up a working group to help super funds navigate the work involved in a merger and present some requirements to try to lighten the load.
Quality of Advice Review
Nettheim said the recommendations in the Quality of Advice Review that super funds be able to give advice had made him “jump for joy”.
CSC was recently part of a roundtable Melbourne with several other super funds to meet with Michelle Levy and discuss her recommendations.
“We already have a small team of fully-qualified financial advisers and I just jump for joy because [the QOA recommendation] is aligned with where I think super funds should be going. We all know there is a supply/demand issue of not enough advisers and too much advice needs so I think the QOA is trying to meet the need,” Nettheim said.
“We want to get people who have skills and experience out into the frontline and that’s why I’m excited because I’ve been saying for some time that the contact centre which engages directly with our customers should be full of experts not the newest people in the industry.
“Everybody says it’s directionally right, there will be a little bit of wincing about a few things but I haven’t heard anybody say, ‘sorry Michelle, you’ve got this wrong’. She should take a lot of confidence in the proposals she’s put forward.”