“The fact that industry funds emerged largely uncriticised from the royal commission process, and certainly in better shape than the retail sector, is no cause for triumphalism,” Mr Silk will say.
“Member and community expectations are going to be higher, regulators are going to be more aggressive, political focus will be more intense and the media scrutiny will be sharper.
“We’ve all made good returns for members in a relatively benign environment.
“How good are we going to be at making money for members – or at least not losing it – in the more challenging investment environment of the next decade?”
Mr Silk has been at the helm of AustralianSuper since its inception in 2006. Today the fund has 5.7 per cent of the $2.7 trillion retirement savings market. According to Rice Warner projections, which are based on Australian Prudential Regulation Authority figures, industry funds will nudge slightly ahead of SMSFs in 2020, with the segments to hold $800 billion and $795 billion respectively in today’s dollars.
AustralianSuper has been the major beneficiary of the billions of dollars flowing from retail funds into industry funds after the banking royal commission.
‘Hysterical commentary’
Mr Silk will warn underperforming funds that they need to exit the system.
“You shouldn’t be able to be in a consistently poor fund because they simply shouldn’t exist,” he will say. “If those running consistently under-performing funds don’t do the right thing, APRA [Australian Prudential Regulation Authority] must.”
Mr Silk will also deal with claims that industry funds are susceptible to pressure from unions and other activists.
“With their large cash flows industry funds are becoming more important stewards of capital than ever before,” he will say.
“Notwithstanding some of the hysterical commentary last week, industry funds have proven themselves to be responsible owners, and committed to delivering strong investment performance for their members.”
Echoing AustralianSuper chairman Heather Ridout, Mr Silk will describe the presence of union and employer representatives on the boards of industry funds as a great strength.
“As they grow and become more sophisticated the funds will need more specialist expertise at board level,” he will say.
“However, the equal representation structure has arguably been the most important factor in the success of industry funds for members, and this must not be lost.
“Maintenance of member representation is critical, and can and must be retained whilst diversifying the skill set on boards and committees.”
The Coalition government has long and unsuccessfully tried to require more independents on the boards of industry funds.
According to the Rice Warner projections, industry funds will overtake the SMSF segment in 2020 and will clearly dominate by 2024 with $1 trillion in funds under management.
There is speculation that Labor’s plan to make franking credits non-refundable will provide another boost to industry funds because it will be less attractive to have an SMSF.
from Trendy Newses https://ift.tt/2Cfkxum
0 Comments