Case study of UniSuper public offer
UniSuper is the fifth largest superannuation fund in the industry and has recently opened its fund to members outside the higher education and research sector. Chief executive officer, Kevin O’Sullivan, explained the reasons for the decision – and potential benefits to members – to Industry Moves.
Why did you decide to open the fund?
Both the higher education sector and the superannuation industry are undergoing significant disruption. We have decided to open as a result of this and to ensure we retain our relative scale, as scale is crucial to delivering better retirement outcomes for all members. As Australia’s fifth largest superannuation fund, the opportunity to welcome new members to the fund is an exciting new chapter for UniSuper.
What has changed in recent years to make you want to open it to outside the sector?
Regulatory change and industry consolidation will reshape the super sector in coming years. Covid-19 has also significantly impacted the higher education and research sector. UniSuper is well placed to navigate the changing environment and attract new members, given our strong investment performance, low fees and member focus.
Why do you think the fund needs more scale than the $95 billion under management it has now?
Opening more broadly will allow us to maintain our position as one of Australia’s largest funds. Significant benefits can be achieved for members by opening the fund more broadly – including those provided by greater efficiencies with increased scale. An increase in size will allow us to further drive strong economies of scale and reduce costs. These savings will be passed on to members through lower fees.
What investment opportunities not available to the fund now will more scale open up?
As a large fund with a strong investment team, we will continue to take advantage of investment opportunities often not available to other funds. By opening to all Australians, our cash flows and our relative scale will be higher than if we were to continue to restrict membership. Strong relative scale will ensure that we continue to be presented with good investment opportunities. And increased cash flows will enable our investment team to take actions without the potential need to sell assets to fund desired investments, investments which we expect will benefit all UniSuper members.
Can you explain the fee structure?
UniSuper fees are among the lowest within the industry. The annual administration fee of members in the Personal Account product is the lesser of $96 and 2 per cent of their account balance (with a maximum monthly fee of $8). This amount is reduced further through a 15 per ent tax rebate applied in respect of this administration fee. Investment fees, which vary between options, are deducted directly from the investment returns provided to members. UniSuper’s investment fees are some of the lowest in the superannuation industry.