Tarnished Australia Pension Funds to Come Back Leaner, Stronger
Tarnished Australia Pension Funds to Come Back Leaner, Stronger
(Bloomberg) -- Australia’s for-profit pension funds, whose reputations were battered by an inquiry into financial industry misconduct, will emerge stronger and more competitive after restructuring their businesses. But it will take time.
That’s the view of industry executives who spoke at a Bloomberg Buy-Side Forum in Sydney on Thursday that explored the future of the superannuation industry.
“Never count the retail sector out,” said Sally Loane, the chief executive of the Financial Services Council, an industry lobby group. “They will come back in a competitive fashion,” helped by their ability to innovate, she said.
For-profit wealth managers such as AMP Ltd. and IOOF Holdings Ltd. have been targeted by regulators after the Royal Commission exposed a litany of wrongdoing across the industry, including charging fees for services they didn’t provide. AMP’s wealth management unit has been hit by an investor exodus, with A$1.8 billion of net cash outflows in the three months to March 31, adding to A$3.97 billion of outflows last year.
Australia’s not-for-profit funds, meanwhile, have been making hay. AustralianSuper Pty, the nation’s largest pension fund, had inflows of A$1.3 billion between December and February from people shifting from other firms -- about two-thirds of which was from AMP or bank-owned funds.
The retail funds are down, but not out, according to Ben Walsh, the CEO of Mercer Australia.
“When those funds step off the operating table they will be stronger than when they went into hospital in the first place,” he said. “Whether it is a year or two or a little longer, we will have to see.”
While retail funds will look different and possibly be “missing limbs” once they emerge from restructuring, they “can still play an important role in the industry,” said Scott Hartley, CEO of Sunsuper Pty, a A$66 billion not-for-profit pension fund.
“But if they are not competitive delivering member outcomes, they won’t be successful,” he said.
To contact the reporter on this story: Matthew Burgess in Melbourne at mburgess46@bloomberg.net
To contact the editors responsible for this story: Edward Johnson at ejohnson28@bloomberg.net, Peter Vercoe
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