Super funds bemoan alternative fees
Australian superannuation funds believe many alternative asset managers’ fee structures are “grossly” excessive, says Australia’s Centre for Investor Education. Jamie Nemtsas, a director at CIE says the 2/20-style fee structure is a “common stress point” for super funds. Government officials, consultants and representatives from a dozen Australian superannuation schemes attended a summit meeting with representatives from the Dutch pensions market, an initiative designed to increase collaboration and share expertise on a number of topics, including the construction of defined contribution systems.
Nemtsas said the 2% management fee was “widely viewed” as being excessive. The Dutch contingent recommended pension funds demand more transparency on fund managers’ internal costs and suggested management fees be structured to cover this pro-rata. Nemtsas added: “The argument for achieving cost economies of scale from potential co-operation or collaboration was discussed extensively, with many ideas shared on how to achieve this.”
Australian pensions funds attending the summit came, in part, to advise the Dutch on DC systems as the country overhauls its Pensions Agreement. Brad Holzberger, chief investment officer at the $30bn QSuper fund, said: “Australia is a leader in the management of DC funds. We have little exposure to defined benefit plans anymore, but we have a central commitment to DC, and our fiduciary system is becoming very experienced at them. I would expect to see Australia lead the adaptation of lifecycle investing, for example, along with the use of longevity-type products.”
Gabriel Szondy, independent director of CARE Super and the Military Superannuation Board, said: “Interestingly, the feedback from the Dutch has been that they are as vitally interested in what we are doing as we are in them because our DC system appears the way the future systems will evolve. They are keen to learn how we engage and communicate with our members.” And Jason Cotter, manager of portfolio services at the $32bn AustralianSuper fund, said: “We have existed in a choice of fund and defined contribution environment for many years and can help the Dutch funds prepare if some of the changes being discussed here occur.”
Holzberger said: “The main interest is forming networks for future co-operation. QSuper has not yet co-invested with any international funds, but we are open to it, and I see it as an inevitable part of our future operations. Australian funds have long tended to take the initiative in searching across the globe for investments, partners and ideas because we are a small but open economy.” He added that a typical Australian fund has at least half of its assets outside the country. “We can also look to the US, Europe, the UK and Asia with a bit more objectivity,” he said. “Being small, we can align with anyone without feeling out of place.”
Investment & Pensions Asia is partnering with the Association of Superannuation Funds of Australia (ASFA) for their inaugural Asia Pacific Pensions Forum. The forum will be held in Hong Kong on September 27th.
ASFA’s chief executive officer Pauline Vamos says, “The Asia Pacific Pensions Forum is designed to provide a regional network event for pension providers. It aims to encourage the exchange of ideas to help strengthen the pension industry and facilitate strategic dialogue on enhancing fund governance and pension fund management.”
This one day forum is a rare opportunity to meet some of the most influential and innovative minds from the Asia-Pacific pension industry. Attendees will learn about international best practice in pension fund management, from regional and international experts who will highlight the need for collaboration and cooperation in the Asia-Pacific region.
The key delegates at the event will be the heads of regional Asian pension funds, as well as financial service providers, advisors, lawyers, actuaries and regulators throughout the Asia-Pacific region. For more information visit the ASFA website www.superannuation.asn.au