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(September-2003) Smooth sailing for HOSTPLUS
From the outside, industry fund HOSTPLUS might appear a troubled fund following the suspension of its acrimonious board in March by the Australian Prudential Regulation Authority (APRA). But behind the scenes, there’s lots of good news.
For one, HOSTPLUS heads SuperRatings’ Top 10 List of final crediting rates after rewarding its members with a return of 4.1 per cent for financial year 2002-03. And it’s one of the fastest growing funds, serving the rapidly expanding hospitality and tourism markets. When executive officer David Elia first joined in 1999, it had 340,000 members and assets of around $820 million. Today, it has 520,000 members and funds of $2.2 billion.
The fund was also one of the first to launch its Product Disclosure Statement, in terms of the FSRA, and has already given APRA its Risk Management Plan as part of that regulator’s new licensing regime.
Elia says talk of HOSTPLUS’s board enduring acrimonious infighting for years isn’t exactly true. “Up until March, when six employer sponsored directors resigned, there had always been healthy debate at board level. It wasn’t infighting and the fund continued to enjoy many successes in recent years.”
Among these were its ability to attract the super of organisations like STA Travel, Touraust and Synergi Travel in competitive tenders, wins which Elia attributes to HOSTPLUS’s clear focus on the hospitality sector where it already has established relationships and strong brand recognition.
Still, steering the fund through the board tensions was no easy feat. “As things escalated, it was important for me to maintain a focus on operational issues and to keep motivation levels up,” says Elia. “During that particular period, we had some of our biggest wins and our day-to-day activities were never impacted… We didn’t lose any staff because of the board problems.
“Some people may have walked away during this time, but I treated it as a learning experience. The fund has now come out of what could have been a potentially very damaging situation and it’s come out exceptionally well.”
But despite its problems, the previous board did manage to approve a host of initiatives, some of which have only been implemented recently, including the launch of health insurance, a re-branding campaign and a logo change.
Elia says: “It might have appeared that the fund had a new lease on life and that it was doing things that it wasn’t able to do before. That isn’t true. It just happened that issues were finalised during the acting trustee’s tenure.”
One of the first things the acting trustee, Ernst & Young Superannuation Nominees No 1, had to do was to extend Superpartners’ administration contract for a further 135 days because the previous contract had expired.
Appointing an administrator had been what ignited the previous board’s conflict and now it will probably be one of the new board’s first priorities.
Elia previously worked for Superpartners (then called JMIFA) in the accounting area and later as its financial controller. But in 1999, HOSTPLUS, which was a client, created the executive director role to lure him across. In 2000, he took over the fund’s reins after CEO Jon Linehan retired, although his title never changed.
Looking ahead, one of his major tasks, now that there’s a new board, will be to complete a merger with Host West, in Western Australia. The two funds had agreed in principle to merge and had almost finished their due diligence when HOSTPLUS’s board problems erupted.
Further merger possibilities will be explored with hospitality related funds and it’s possible that previous merger talks with Host Super in Queensland could be re-ignited.
HOSTPLUS is also exploring fast-growing related employer sectors like sports and recreation. After picking up the super of the Melbourne Storm, Elia believes that there are further opportunities with AFL and NRL associated clubs.
Elia doesn’t get much time off, but when he does, he can be found playing a round of golf or watching the AFL with his family, who keenly support the Richmond Tigers.
AUTHOR
Zilla Efrat
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