AustralianSuper and AGEST announce intention to merge

Following its successful merger with Westscheme in 2011, AustralianSuper is set to expand even further by joining forces with AGEST in 2012.

In December 2011, AGEST announced AustralianSuper as its preferred merger partner, following an extensive tender process. AustralianSuper currently has 1.8 million members and over $42 billion in funds under management. AGEST has approximately 130,000 members, predominantly current and former Commonwealth and Territory public sector employees, and manages around $4.3 billion in funds.

AGEST CEO, Ms Cath Bowtell, said that AGEST’s decision to seek a merger partner arose from the Board’s view that members’ interests are best served by being in a large fund that is growing strongly.

“AustralianSuper was selected as the best fit for AGEST because of its consistent investment performance, commitment to low fees, wide variety of investment options, extensive range of ancillary services and strong national presence,” said Ms Bowtell. “AustralianSuper’s extensive merger experience was also a factor.”

AustralianSuper Chief Executive, Ian Silk, said, “We are delighted that AGEST has chosen AustralianSuper as their preferred merger partner. Above all else, the merger is about providing greater benefits for members and maximising their retirement savings.

“AGEST members will benefit from being part of a fund that can deliver the products, services and help that is necessary to achieve the best possible retirement outcomes now and into the future. In addition, there is a strong alignment of values, culture and focus on better outcomes and advocacy for members.”

In 2012, AGEST and AustralianSuper will undertake due diligence on each other. A full cost benefit analysis and an integration plan will also be part of the next stage.

AGEST has made a submission to the Government requesting CGT rollover relief and will continue to seek to preserve its deferred tax asset in the proposed merger.

This was the second major merger announcement for AustralianSuper in 2011, with Westscheme merging into the fund last June.

Mr Silk said, “We aim to keep growing as scale enables us to deliver the best prospects for secure retirement to the greatest possible number of Australian workers.”

For more information, visit AustralianSuper at www.australiansuper.com.au or AGEST at www.agest.com.au

AustralianSuper leads the way with new investment offering in term deposits

AustralianSuper is meeting member demand for more conservative investment products by offering term deposits in its Member Direct Option.

AustralianSuper has announced the inclusion of term deposits as part of its Member Direct investment option. The super fund has developed the new product as more members begin to seek investment options that have a greater level of certainty in the marketplace.

Ian Silk, Chief Executive, AustralianSuper, said that term deposits in general had been growing rapidly in recent years and that he expected a greater interest in term deposits within super to follow.

“AustralianSuper is committed to developing and delivering market-leading products and services at low cost and our new term deposit options are an excellent example of this,” he said. “Members will be able to choose between options of three, six and 12 month terms, with a minimum deposit of $2,000 and a maximum of $5 million – and at sustainably competitive rates.”

AustralianSuper has selected NAB and ME Bank as the Fund’s term deposit providers following a competitive tender process.

“Unlike other platforms or retail super funds, we are not tied to a product provider, so we can focus on achieving the best possible deal for our members,” Mr Silk said. “Our size and scale also gives us significant bargaining power on behalf of our members in the market.”

AustralianSuper’s Member Direct investment option provides members with the opportunity to have more direct control over how their super is invested. The option allows members to invest directly in ASX300 companies, ETFs and term deposits.  It also includes an associated cash account, as well as sophisticated research and reporting capability.

For more information, visit the website.

Super funds get active on climate change

Industry SuperFunds like Cbus, AustralianSuper and HESTA are involved in activities designed to address the challenges created by climate change, while ensuring members receive good long-term returns. Network News will provide regular updates on climate change activity in the sector.

The current debate around the introduction of a carbon price in Australia is sharpening the focus of super funds on the importance of ensuring their activities meet the demands of the proposed regulatory environment.

Cbus is one fund already actively working to ensure its property development activities support not only jobs and the building and construction industry, but also play a role in reducing carbon emissions.

‘Buildings are a significant contributor of CO2 both during construction and throughout their life, so it is important to make changes in this area,’ says Cbus ESG Investment Manager, Louise Davidson.

‘Our strategy is to strive for Five Green Stars or above in all Cbus buildings.’

One of the key ways Cbus is making a contribution is through the properties the fund is developing. ‘We have a strong focus on sustainable buildings that use the latest thinking from around the world,’ Louise explains.

First Six Green Star building

The construction of a new Six Green Star rated building at 1 Bligh Street, Sydney is an example of this approach. The premium grade high-rise located in Sydney’s financial precinct is Australia’s first commercially viable Six Green Star building.

The building offers 27 levels of office accommodation and features a double-skin, glass facade with a naturally ventilated atrium the full height of the building. ‘It is very energy efficient, with automatically activated blinds between the glass sheets. This has a big impact on the need for cooling in the building,’ Louise says.

Other Green Star features include onsite gas and solar power generation, black water recycling for washroom flushing and low carbon concrete. The building’s windows can be opened when the weather is appropriate to improve air quality and to reduce the need for heating and cooling. All the timber used in both the construction and fit-out is Forest Stewardship Council certified.

As tenants also play an important role in maintaining a building’s Green Star rating, Cbus is planning an ongoing education and relationship program. This will help ensure tenant behaviour does not negate the building’s positive design features.

According to Louise, these initiatives are about actively managing the fund’s assets to benefit the portfolio and in turn, members. ‘We are setting the property portfolio up for the future, especially given the likely increase in the demand and use of these types of buildings. We like to be able to do the right thing, but it is really about the long-term returns to members.’

Investment threats and opportunities of climate change

This attitude reflects the importance Industry SuperFunds like AustralianSuper are placing on the impact climate change could have on their investment portfolio. AustralianSuper has been working with 13 other institutional asset owners to explore the impact of climate change scenarios on their asset allocation. Partners in this groundbreaking Mercer study included leading pension funds such as the Norwegian Government Pension Scheme, CalPERS, the Ontario Municipal Employees Retirement System and the Maryland State Retirement and Pension System.

The Mercer study reviewed the potential investment opportunities and risks of climate change over periods until 2030 and 2050. It found climate change could contribute as much as 10% to investment portfolio risk over the next 20 years.

AustralianSuper has commenced a high-level climate change risk assessment, which involved reviewing the policy and potential physical impact risks that could affect the fund’s top 20 property and infrastructure assets. It also plans to do the same for its Private Equity assets.

As a result of their assessment, AustralianSuper plans to engage with their domestic and international property fund managers on their sustainable building practices and energy efficiency programs. For infrastructure, the fund will conduct a carbon assessment of its assets. In addition, the potential physical impact risks will be examined in greater detail.

AustralianSuper ESG Manager – Investments, Kelly Christodoulou, says the work we have planned aims to reduce the impact of climate change on its investment portfolio and protect the fund’s assets.

AustralianSuper also plans to conduct a carbon assessment of its equities portfolio and use this to engage with domestic listed companies on their climate change risk strategies. 

IGCC and climate change

Industry SuperFunds have also been active in joining the Investor Group on Climate Change Australia/New Zealand (IGCC) and are playing an important role on its Investor CEO Panel. Membership of the CEO Panel includes HESTA (Anne-Marie Corboy), Cbus (David Atkin) and AustralianSuper (Ian Silk).[Also on the CEO Panel is Frank Pegan CEO of Catholic Super and Terry McCredden CEO of UniSuper). It will act as a key advisory group for IGCC input to the Federal Government’s business roundtable on climate change.

Members of the Investor CEO Panel recently participated in a major IGCC/Financial Review debate on the impact of climate change on investors. This discussion received extensive coverage in the Financial Review, with all the CEO participants highlighting the importance of climate change issues.

The debate also stressed the significance of introducing carbon pricing to the activities of long-term investors like super funds, according to Nathan Fabian, Chief Executive Officer of the IGCC.

‘If investors are going to make long-term investment decisions they need long-term price signals. Some of the super funds are concerned about the transition from fixed to flexible pricing. Investors want any scheme to achieve least cost emissions abatement. To do that it needs to have the broadest coverage of sectors and follow the polluter pays principle, so if companies emit they are responsible for it,’ Nathan says.

Results of annual climate change survey 

As Network News was being finalised the results of the third annual climate change survey by The Climate Institute/Australian Institute of Superannuation Trustees (AIST) were released with a total of 18 funds deciding to participate in this year’s survey. Two Industry SuperFunds, NGS Super and CareSuper, were ranked in the leading four. Both of these funds were in the top quartile in all ten areas of the survey. They also showed particular strength in:

- Reporting of climate change issues and assets,
- Climate change skills, training and education, and
- Management of investment/fund managers.

For more details on 1 Bligh Street, Sydney, visit http://www.1bligh.com.au/

For more information about the IGCC organisation, visit http://www.igcc.org.au/

For more information on the Awards visit http://www.climateinstitute.org.au/media-contacts/media-releases

AustralianSuper goes from strength to strength

Announcement of the proposed merger between Westscheme and AustralianSuper highlights the significant role Industry SuperFunds are playing in the finance industry. The $40 billion combined fund will have 1.7 million members and 150,000 employers, with one in four WA workers being members of the fund.

The proposed merger will take place on 30 June 2011 after completion of the due diligence process, with Westscheme becoming a new, separate division within AustralianSuper. The division will be responsible for servicing both Westscheme members and most AustralianSuper members in WA.  

According to Westscheme CEO, Howard Rosario, the merger arrangement is about securing the retirement futures of Westscheme’s members through the size and scale of the new combined entity. He said the fund’s ‘member first’ focus led it to view the merger as a way to secure the best possible long-term outcomes for its members.

‘AustralianSuper is a fund that has shown the potential to deliver our members strong, long-term investment performance and low costs. Members will also benefit from the enhanced services and products that AustralianSuper provides, including a market-leading insurance offering,’ Rosario said.

The decision to merge reflects the increasing challenges facing super funds and the need for Industry SuperFunds to be proactive in dealing with these challenges.

This means expanding to deliver the best prospects for a secure retirement to the greatest possible number of Australian workers, according to AustralianSuper CEO, Ian Silk.

‘AustralianSuper has a very strong vision about the future of superannuation in this country and we are determined to play a leading role in shaping that future in the interests of our members,’ he said.

‘The merger brings size, scale and capability to lead the industry on performance, low fees, better value and advocacy for members.’

Click here to read more about details of the merger.