In what represented one of the most significant signs that the corporate superannuation arena is growing progressively smaller as a result of outsourcing, the big $700 million 8,000 member News Limited fund announced in early January that it was moving under the Russell Investment Group umbrella while Tabcorp holdings has opted to go with AMP.
The move will see NewsSuper managed as a separate sub-section of Russell’s SuperSolution Master Trust and reflects one of the benefits to flow from Russell’s acquisition last year of the Australian business of Towers Perrin.
It also reflects the impact of the increasing superannuation regulatory burden on Australian companies with News Limited’s group human resources director, Keith Brodie making it clear that superannuation had become a burden the big company was no longer willing to carry.
“We concluded that with the advent of choice and the ongoing changes to Government regulation and associated compliance burden, we were better off leaving it to the experts,” Brodie said.
“We have a strong relationship with Russell and formed the view that it was the only firm that could fully accommodate the investment and administrative complexities of our fund,” he said.
Brodie said that each of News Limited’s previous steps along the outsourcing path had been successful and he believed this last step would provide better outcomes for the company’s employees.
Commenting on the deal, the managing director of Russell in Australia, Alan Schoenheimer said that it reinforced the complementary strengths of Russell and Towers Perrin which had been bolstered late last year by Nestle and George Weston Foods coming aboard as administration and consulting clients.
“This deal highlights the fact that even very large organisations can achieve a sophisticated and cost-effective outsource solution for their employees,” he said.
The News Limited fund had been administered by Towers Perrin since 2001, with Russell having been its asset consultant since July 2003.
The announcement of the outsourcing of the News Limited fund came a month after the release of a survey suggesting there would be no slackening in the pace of corporate superannuation outsourcing as increased levels of compliance continued to impact on companies.
The Tabcorp outsourcing represents a smaller move involving three funds with a combined total of 4,500 members and $200 million in assets.
The move sees the Tabcorp Superannuation Fund, the Jupiters Limited Superannuation Fund and the Tab Limited Staff Superannuation Fund move within the AMP SignatureSuper master trust.
In similar fashion to News Limited, Tabcorp’s executive general manager, human resources, Robert Preston cited the ongoing complexity of superannuation and the forthcoming requirement for trustee boards to be licensed as the key motivators for the outsourcing move.
