Future Fund general manager to have his say on superannuation reform

The Australian Future Fund’s former general manager, Paul Costello, is the chair of a committee advising the government on the implementation of what could be the most important reforms to the $1.3 trillion Australian superannuation industry since the introduction of compulsory super in 1992.

The ‘stronger super peak consultative group’ will begin detailed consultation of the government’s stronger super reform package – a response to the Cooper Review of superannuation – later this month.

The reform agenda covers default investment strategies, administration platforms and trustee governance of the system.

Representatives of key stakeholders in the super sector, including employers, employees, industry service providers and consumer advocates, comprise the group and are expected to meet in February.

Several working groups will also support the group and will cover MySuper governance, self-managed superannuation funds, and SuperStream.

The Future Fund, which (including Telstra shares), manages assets of $71.76 billion, is yet to replace Costello, who left the fund late last year. He was at the fund for nearly four years.

The Future Fund returned 7.5 per cent for the year to the end of December. The biggest portfolio changes in the past year have been a reduction in allocation to debt securities 25.4 to 18.8 per cent, with a subsequent rise in alternatives from 11.4 to 15.2 per cent.

In the last quarter of the year, the fund’s cash assets decreased, having reached an abnormal hight in September due to the fund’s policy of substantially hedging its foreign currency exposures so that 80 per cent of the portfolio is held in A$.

There were large inflows as a result of the Australian dollar’s appreciation which lifted the cash holding over the September quarter. At the end of the year cash sat at about 15.8 per cent, and the fund is expected to reduce this further as existing unfunded commitments are drawn down and additional opportunities are identified.