Executive Summary

The trustee of Macquarie Superannuation Plan (MSP) and Definitive Superannuation Plan (DSP), Macquarie Investment Management Limited (the Trustee) is now required to annually assess and compare the quality and competitiveness of its superannuation and pension products. This is a new regulatory requirement that was legislated in 2019.

The Trustee has recently completed its first member outcomes assessment for the Macquarie Superannuation Plan and Definitive Superannuation Plan for the period 1 December 2019 to 30 November 2020 – this assessment covers the following superannuation and pension products (collectively, ‘the products’):

Macquarie Superannuation Plan

  1. Super and Pension Manager II
  2. Super and Pension Consolidator II (Engage and Elevate investment menus)
  3. Super and Pension Consolidator*, including the following branded products
    a) Vision Super and Pension
  4. Super and Pension Manager*, including the following branded products
    a) Private Portfolio Solution Super Account*
    b) Private Portfolio Solution Pension Account*
    c) Premium Super Online*
    d) Premium Pension Online*
    e) Gateway Super and Pension Service*
    f) Premium Portfolio Service Super Account*
    g) Premium Portfolio Service Pension Account*
  5. Super Accumulator*
  6. Term Allocated Pension Manager*

Definitive Superannuation Plan

  1. Definitive Super Account*
  2. Definitive Pension Account*

* Note these products are closed to new members.

These are choice platform products that are only available for members who choose the relevant product. There are no members who default into a MIML product and so there are no MySuper members.

Following the completion of this assessment, the Trustee has determined that for the products listed, it is promoting the financial interests of members – this document summarises the results of the Trustee’s assessment.

 

 

Overall determination

The Trustee has determined that it is promoting the financial interests of beneficiaries in relation to all of its superannuation and pension products.

 

 

Member Outcomes Assessment

In assessing whether each product is promoting the financial interests of members and in reaching overall product determinations, the Trustee undertook a two-part assessment involving consideration of the following factors:

Part One

  • the options benefits and facilities offered under each product;
  • the Trustee’s investment strategy;
  • the Trustee’s insurance strategy and fees;
  • the scale of the Trustee’s operations;
  • operating costs; and
  • the Trustee’s basis for setting fees.

Part Two

  • the fees and costs that affect member returns;
  • the level of investment risk; and
  • investment return.

Options, benefits and facilities

The Trustee’s products offer a number of options, benefits and facilities to members, including a large investment menu covering a wide range of asset classes, individual tax reporting, flexible pension payment options for those drawing an income stream and estate planning options that provide certainty. There are over 1,700 investment options available to MSP members and over 1,200 available to DSP members. These features are supported by a digital platform (i.e. ‘the platform’) where members (assisted by their financial advisers) can manage and monitor their retirement savings.

The Trustee’s Net Promoter Scores, which is a common measure of the willingness of customers to recommend a product, are strong. Industry surveys and research also highlight that the Trustee performs well in terms of platform functionality, platform satisfaction and user satisfaction when compared to other superannuation platform providers1.

The Trustee has determined that the options, benefits and facilities available to members are appropriate for its members and that the fees charged by the Trustee for access to these options, benefits and facilities are commensurate to the features offered and market competitive.

1Research from NMG and Investment Trends respectively.

Investment Strategy

Through each of the Trustee’s products, members can access a variety of investment options from which the member, generally in conjunction with their adviser, can construct a unique portfolio. The Trustee itself does not make investment choices on behalf of members.

The Trustee aims to provide sufficient choice to members so that they can construct a portfolio that suits their individual needs.

The Trustee regularly assesses the investment options made available to members within each superannuation or pension product, so that members have access to a wide range of quality options. All of the managed funds offered on the investment menu are regularly graded by independent research houses, with 34 per cent of the managed funds offered receiving the highest-grade ratings. Further, independent assurance over the Trustee’s Investment Governance Framework (IGF) was completed in July 2020 and found the IGF to be effective and appropriate.

The Trustee has determined that its investment strategy is appropriate for its beneficiaries. The Trustee has achieved its objective to provide its members with access to a wide choice of investment options to enable the implementation of diversified portfolios, catering to differing member circumstances, investment views and preferences. 

Insurance Strategy

As a choice platform, the Trustee does not automatically acquire insurance cover for members. Members can choose the type, level and cost of their insurance from a range of four external insurers.

Each insurance product offered via the Trustee’s superannuation products has been through a due diligence process, which assesses the suitability of products and insurers for MIML’s members. Once available to members, the Trustee monitors these insurance products and insurers against certain standards and service levels.  

The Trustee determined that its insurance strategy is appropriate for its beneficiaries and provides members with access to a wide choice of insurance options, giving them the flexibility to tailor their insurance cover (if obtained) to meet their needs. 

Insurance fees

The Trustee regularly monitors the insurance premiums that are paid from members’ superannuation accounts as a percentage of their account balance. If the Trustee believes that a member’s account balance may be inappropriately eroded due to insurance premiums, the Trustee will write to those members. This correspondence highlights the need for advisers and members to consider the balance between the need to maintain affordable insurance benefits and preserving their retirement income.

When members obtain insurance, the Trustee considers that members and their advisers are in the best position to determine whether the premium payable is appropriate to the members individual needs. 

Scale of the Trustee’s business operations

The Trustee believes that the scale of its business operations is sufficient so that it:

  • can deliver on its business plan objectives and initiatives; and
  • does not disadvantage the financial interests of members holding the Trustee’s products.

Continued growth in the number of member accounts and benefits in the MSP enables the Trustee to continue to invest and remain focused on improving member experience and outcomes. A key focus for the Trustee this year will be to successor fund transfer DSP members to an open product with modern features, subject to relevant assessments, in order to improve outcomes for these DSP members. 

 

Operating costs

Operating costs are paid from the fees that the Trustee earns for acting as trustee of the superannuation fund. The Trustee actively reviews its cost base to instil cost discipline and actively manages operating costs.

The Trustee believes that the operating costs of its business operations are not inappropriately affecting the financial interests of beneficiaries.  

Basis for setting fees

The process for setting administration fees for the Trustee’s products involves extensive analysis. This includes consideration of competitor products and pricing, feedback from existing members and their financial advisers, sustainability of the fund, as well as the cost of developing new products or features. Given this detailed analysis, The Trustee has assessed that its basis for setting fees is appropriate for members. 

Fees

Following a detailed assessment, the Trustee has determined that, overall, the fees charged to members for its products are:

  • industry competitive
  • appropriate to its members
  • commensurate to the options, benefits and facilities offered to members.

The Trustee has used a comparison tool developed by an external research, data insights and technology company to compare the administration fees2 for its products against a set of competitor products. The competitor products are contemporary choice platform products offered by large, established competitors which provide members with access to a range of investment options and typically require a financial adviser upon application.

For the purposes of this summary, the Trustee has published the minimum, maximum and median competitor fee. Fees were calculated using actual average balances for members of the Trustee’s superannuation and pension products and average asset allocations for each individual product to reflect actual member experience more accurately.

2Administration fees are calculated net of cash interest.


Fee Comparison – Macquarie Superannuation Plan (Series II Products) 

The Trustee launched a suite of new products (known as ‘Series II products’) in late 20193. As shown in the table below, the fees for the Series II products are below the peer group median.

Product

Average Balance
($000)

Macquarie Product
Fee (%)

Median Competitor Fee (%)

Maximum Competitor Fee (%)

Minimum Competitor Fee (%)

Macquarie Super Consolidator Series II - Engage

150

0.16

0.36

0.59

0.16

Macquarie Super Consolidator Series II - Elevate

550

0.32

0.36

0.60

0.28

Macquarie Super Manager Series II

200

0.35

0.50

0.79

0.35

Macquarie Pension Consolidator Series II – Engage

250

0.09

0.32

0.60

0.09

Macquarie Pension Consolidator Series II - Elevate

700

0.27

0.31

0.51

0.26

Macquarie Pension Manager Series II

400

0.22

0.38

0.67

0.22

3Series II products were launched in November 2019 and are an evolution of the Super Manager and Super Consolidator products.


Fee Comparison – Macquarie Superannuation Plan (Closed Products)

The Trustee’s older style ‘Series I’ products, which are closed to new members, are less contemporary in the context of the fee structures now available. However, the Trustee has provided advisers with a fee calculator to compare the costs of older style products to Series II products and the ability to seamlessly switch if it is in the member’s best interests. In order to continue to make members aware of Series II pricing, the Trustee is currently in the process of writing to all Series I Consolidator and Manager members4 (those who have not already switched) to inform them of the new products and to, where appropriate, encourage a conversation with their adviser, as individual scenarios may vary from the information below.

Product

Average Balance
($000)

Macquarie Product
Fee (%)

Median Competitor Fee (%)

Maximum Competitor Fee (%)

Minimum Competitor Fee (%)

Macquarie Super Accumulator

50

0.68

0.93

1.40

0.52

Macquarie Super Manager

250

0.53

0.48

0.77

0.39

Macquarie Super Consolidator

300

0.57

0.46

0.73

0.38

Macquarie Pension Manager

350

0.46

0.42

0.69

0.35

Macquarie Pension Consolidator

450

0.49

0.40

0.65

0.30

4The Super Accumulator product has not been included as part of the communications being sent to Series I members, as the Series II products are not considered to be comparable.


Fee Comparison – Definitive Superannuation Plan (Closed Products)

DSP products are closed to new members.

DSP fees in the comparison below are based on the administration fees disclosed in the relevant Product Disclosure Statement (PDS). Due to legislative changes removing the payment of commissions to financial advisers, the actual fees paid by members may be lower than the comparison below.

Product

Average Balance
($000)

Macquarie Product
Fee (%)

Median Competitor Fee (%)

Maximum Competitor Fee (%)

Minimum Competitor Fee (%)

Definitive
Super Account

400

0.65

0.41

0.67

0.30

Definitive
Pension Account

600

0.57

0.35

0.57

0.27


Comparison of other fees

Note that in assessing the appropriateness of the fees charged to members, the Trustee has not compared or assessed fees relating to specific investment options as these fees are set and retained by the relevant fund manager. Similarly, financial advice fees have not been taken into consideration, as any advice fee charged to a members account is agreed between the member and their financial adviser.   

Investment Risk

The Trustee has assessed the investment risk across all of its superannuation and pension products by reviewing existing investment governance processes, specifically investment limits and market risk stress testing.

To manage the risk of a member losing a significant portion of their balance due to negative market movements and to increase diversification in members’ portfolios, the Trustee:

  • applies and monitors investment limits: these are limits placed on the ability to purchase assets and/or asset classes once exposure to that asset and/or asset class has exceeded a specific limit, noting that there are various circumstances where members may move above those limits, including as a result of market movements.
  • assesses investment risk through stress testing: this involves identifying accounts with stress test flags to detect those members who are at risk of an inappropriate loss of funds in certain simulated market downturns.

Following this assessment, the Trustee determined that, given the policies and procedures it has in place, the level of investment risk in its products is appropriate for its members.

Investment Returns

The Trustee provides members with a wide choice of quality investment options, enabling members and their advisers to tailor their portfolio to suit their needs and objectives. In providing these options, the Trustee does not make investment choices – these decisions are made by members, generally in conjunction with their financial adviser. This presents limitations in assessing absolute member returns because:

  • each member constructs a unique asset portfolio utilising the large investment menu made available by the Trustee, in most cases, with the help of a financial adviser
  • portfolios and the returns generated by the investment options in those portfolios are unique to each member
  • assessing return data at the fund level for members is not useful as it does not reflect actual member outcomes

Considering the limitations noted above, to assess returns, the Trustee monitors the performance and integrity of the investment options made available to members.

Following this assessment, the Trustee has determined that the returns in its superannuation and pension products are appropriate for its members. The Trustee believes that its investment governance framework and associated processes that monitor the performance of investment options are effective.

Additional information

Unless stated otherwise, this information has been prepared by Macquarie Bank Limited AFSL and Australian Credit Licence 237502. It is provided for the use of licensed and accredited brokers and financial advisers only. In no circumstances is it to be used by a potential client for the purposes of making a decision about a financial product or class of products.

The information on this page does not take into account your objectives, financial situation or needs. Before making any financial investment decision or a decision about whether to acquire a product mentioned on this page, a person should obtain and review the terms and conditions relating to that product and also seek independent financial, legal and taxation advice.