Trial Outcomes Assessment Report

willistowerswatson.com

Outcomes Assessment Report

Towers Watson Superannuation Fund

26 February 2021

© 2021 Willis Towers Watson. All rights reserved.

willistowerswatson.com 2© 2021 Willis Towers Watson. All rights reserved. Proprietary and Confidential. For Willis Towers Watson and Willis Towers Watson client use only.

Introduction

This report provides the Trustee of the Towers Watson Superannuation Fund (the Fund) with an assessment of the

member outcomes as set out in the Fund’s Outcomes Assessment Policy approved by the Trustee in December 2020,

to assist the Trustee make the determinations required under Section 52(9) of the SIS Act in relation to the promotion of

the financial interests of members of the Fund.

The assessments made in respect of investment performance are generally effective 30 June 2020. Certain

assessments (e.g. those relating to insurance) are based on data current at the time of preparing this report.

This report is provided subject to the terms set out herein and in the Superannuation Administration and Consulting

Retainer Agreement dated 8 February 2021, as amended. This report is provided solely for the Trustee's use and for

the specific purposes indicated above. It may not be suitable for use in any other context or for any other purpose.

Except where we expressly agree in writing, this report should not be disclosed or provided to any third party, other than

APRA as regulator of the Fund. In the absence of such consent and an express assumption of responsibility, no

responsibility whatsoever is accepted by us for any consequences arising from any third party relying on this report or

any advice relating to its contents.

In preparing this report, we have relied upon information and data provided to us orally and in writing by the Trustee and

other persons or organisations designated by the Trustee. We have also sourced data from SuperRatings surveys(1),

quarterly and annual APRA Statistics and publicly available information from various superannuation funds’ websites.

We have relied on all the data and information provided as being complete and accurate.

(1) Source: SuperRatings Pty Ltd’s Survey, published 21 July 2020, www.superratings.com.au.


Executive Summary

© 2021 Willis Towers Watson. All rights reserved. Proprietary and Confidential. For Willis Towers Watson and Willis Towers Watson client use only.3


Background Context

▪ The Fund is a non-public offer hybrid defined benefit/accumulation fund that operates on a not for profit basis.

▪ The Fund is a standard employer-sponsored fund that offers membership to current employees of the Company on a

voluntary basis. The Company meets the cost of the Fund’s administration (excluding certain activity fees) and

insurance fees for standard insurance cover for all members.

▪ The Fund has the following categories of members:

■ Accumulation members

■ Insurance Only members

■ Defined Benefit members

▪ The defined benefit membership has been closed since 1 January 2011.

▪ The Fund has a single Choice Product, that covers all members irrespective of their chosen investment option(s).

▪ The Fund provides:

■ a range of 5 investment options for members – members can choose any combination of options;

■ standard death and TPD insurance cover for all members. The cost of this standard insurance cover is met by the

Company; and

■ additional voluntary insurance for death and TPD is available to all members.

▪ The Fund’s activity based administration fees payable by members, to the extent that they are not met by the

Company, are set at the level charged by the Fund’s administrator, the Regulators and other service providers (e.g.

auditors, legal advisors, APRA etc.) in accordance with the Fund’s Expenditure Policy. In addition, investment fees

payable by members are set at the level charged to the Fund by the investment managers.

4© 2021 Willis Towers Watson. All rights reserved. Proprietary and Confidential. For Willis Towers Watson and Willis Towers Watson client use only.

EXECUTIVE SUMMARY


Peer Funds

▪ The Trustee considers it appropriate that funds in the peer group should be funds to which the Company could, in

theory, make contributions for members who are employees of the Company.

▪ In selecting the peer group funds, the Trustee has had regard to a range of factors including the fund’s profile,

investment approach, being of a similar nature and accessibility to employees on leaving service and a mix of retail

and not for profit funds.

▪ The Trustee has selected the following funds as peer group products for its Choice product comparisons:

Note – the peer group funds may vary depending on the factor under consideration and the availability of suitable data for

comparisons, so not all funds identified as peers may be relevant for each factor considered. For the purposes of

comparing the Fund’s investment returns, peer groups include funds and data in surveys available to the Trustee (e.g.

SuperRatings) as set out in this report.


Retail Funds Not for Profit Funds

AMP SignatureSuper AustralianSuper

ANZ SmartChoice Super CareSuper

BT Lifetime Super Equipsuper

Colonial First State Super Sunsuper

iQ Super-Saver by Russell Investments

Mercer Super Trust

MLC MasterKey Business Super

EXECUTIVE SUMMARY


Member Outcome Benchmark(s) Result

1Provide options, benefits and facilities

so members can make informed

decisions about their superannuation

and achieving their retirement goals

▪ Member complaints about options,

benefits or facilities

▪ SLA Reports from administrator

▪ Services available to members relative to

member services offered by peer group

funds

Achieved

Not Achieved

Achieved

✓

✓

2Implement investment strategies for

each investment option that are

consistent with the return and risk

objectives of each option

▪ Expected risk and return characteristics

consistent with the investment objectives

of each investment option, as assessed

through the IGF

▪ SAA Benchmarks

▪ SAA peer group surveys

Achieved

Achieved

Not Achieved

✓

✓

3Provide standard and additional

voluntary death and TPD insurance

benefits that are appropriate to

members at reasonable cost

▪ Comparison of standard cover for

representative hypothetical members in

peer group funds

▪ Comparison of voluntary insurance costs

Achieved

Achieved

✓

✓

4 Maintain sufficient scale to achieve

desired member outcomes

Trustee gives a positive overall determination

under section 52(9) of the SIS Act based on

the weighted assessments set out in the

Outcomes Assessment policy

Achieved ✓

EXECUTIVE SUMMARY


Member Outcome Benchmark(s) Result

5 Fair and reasonable allocation of activity

based fees to members

Activity based fees charged by

AdministratorAchieved ✓

6Maintain funding of the defined benefit

section at satisfactory level to deliver

defined benefits for members entitled to a

defined benefit

Defined Benefit vested benefits index not

less than 100%Achieved ✓

EXECUTIVE SUMMARY


Comments

▪ Outcome 1 (options, benefits and facilities) – The Administrator failed to meet some agreed service standards due in

part to the COVID-19 pandemic as well as resourcing issues due to staff turnover. Performance for the September

2020 quarter was favourable and the Administrator’s performance continues to be monitored.

▪ Outcomes 2 (investment returns) – 5-year Investment returns (net of investment fees and tax) for the Aggressive,

Balanced, Moderate and Cash options were below median in the last two 5 year periods. For the Growth option, the 5-

year investment returns (net of investment fees and tax) were below median in the last five 5 year periods and the 10-

year investment returns (net of investment fees and tax) were below median in four out of the last 5 year periods. The

Trustee notes that there is an imperfect alignment of the groupings of the Fund’s options in the peer group ratings and

that for all the Fund’s options, the “Growth” asset allocation was either at the bottom or at the lower end of the

specified ranges.

The most recent annual review of the investment strategy was completed in November 2020 and the recommended

changes have begun to be actioned in February 2021. The recommendations aim to improve portfolio diversity,

efficiency, and downside protection, while bringing overall level of risk in the portfolio more in line with the model

portfolios and peers.


EXECUTIVE SUMMARY


Member Outcome Summary of analysis Factor

addressed

Importance

rating1

Overall

Result2

1 Provide options, benefits and

facilities so members can make

informed decisions about their

superannuation and achieving their

retirement goals

Not achieved in relation to

administrator’s performance against

service standards

Achieved in relation to services provided

to members and member complaints

✓

Options,

benefits and

facilities

s. 52(11)(a)

Less important +/-

2 Implement investment strategies for

each investment option that are

consistent with the return and risk


Achieved in relation to the expected

risk/return characteristics being

consistent with IGF

Achieved in relation to SAA benchmarks

Not achieved in relation to SAA peer

group surveys

✓

✓

Investment

strategy

s. 52(11)(b)

Returns

s. 52(10A)(b)

Most important

+/-

3 Provide standard and additional

voluntary death and TPD insurance

benefits that are appropriate to

members at reasonable cost

Achieved✓

Insurance

strategy

s. 52(11)(c)

Important✓

4 Maintain sufficient scale to achieve

desired member outcomes

Achieved✓

Scale

s. 52(11)(e) –

SPS515 para

23(b)

Least

important ✓

5 Fair and reasonable allocation of

activity based fees to members

Achieved✓

Basis for

setting fees

s. 52(11)(e) –

SPS515 para

23(c)

Less important✓

EXECUTIVE SUMMARY

Balancing Factors


Member Outcome Summary of analysis Factor

addressed

Importance

rating1

Overall result2

6 Maintain funding of the defined benefit

section at satisfactory level to deliver

defined benefits for members entitled to a

defined benefit

Achieved✓

Defined benefit

funding

Important✓

Notes:

1. The Trustee has attributed an importance ranking for each factor for balancing the factors in accordance with SPS 515 and the Outcomes Assessment Policy.

Overall, the factors under section 52(10A) of the SIS Act have more importance than those under section 52(11).

2. The overall result applies the importance rating to the summary of analysis for each factor to achieve an overall outcome in relation to each Member Outcome.

EXECUTIVE SUMMARY

Balancing Factors (cont.)


Conclusion

▪ Paragraph 4.20 of the Outcomes Assessment Policy requires the outcomes assessment report to include the Consultant’s view on various matters including whether it would be reasonable for the Trustee to make positive determinations under sections 52(9)(a) and 52(9)(aa) of the SIS Act.

▪ Based on the results of this Outcomes Assessment it is our view that it would be reasonable for the Trustee to make the positive determinations under sections 52(9) and 52(9)(aa) of the SIS Act. In our view, the Trustee could reasonably make the following determinations:


Determination Requirement

The financial interests of the members of the Fund are being promoted by the Trustee SIS 52(9)(a)

Because of the scale of, and within, the Trustee's business operations, the choice members are not being disadvantaged

Paragraph 23(a) of SPS 515

The Fund’s operating costs are not inappropriately affecting the financial interests of members Paragraph 23(b) of SPS 515

The basis for the setting of fees is appropriate for the members of the Fund Paragraph 23(c) of SPS 515

The options, benefits and facilities offered are appropriate for the members SIS 52(11)(a)

The investment strategy, including the level of investment risk and return target, is appropriate for the members

SIS 52(11)(b)

The insurance strategy is appropriate for the members SIS 52(11)(c)

There is no assessment in respect of the requirement to determine whether the financial interests of

members being promoted, as assessed against benchmarks specified in regulations, because no regulations have been made

SIS 52(9)(aa)

EXECUTIVE SUMMARYEXECUTIVE SUMMARY

willistowerswatson.comwillistowerswatson.com

Provide options, benefits and facilities so members can

make informed decisions about their superannuation and

achieving their retirement goals

Member Outcome 1



On average, the administrator has met 75.6% of service performance targets over the year to 30 June 2020.

The weaker performance in the September 2019 quarter was partly due to resourcing and conflicting priorities with the

annual review. The weaker performance in the March 2020 quarter was partly due to the escalating COVID-19

pandemic situation and staff resourcing issues.

More recent performance has been favourable, with approximately 95% of targets met in the June and September 2020

quarters.

Member Outcome 1: Options, Benefits and Facilities


MEMBER OUTCOME 1

Administrator has not met service performance targets when averaged over the 4 quarters to 30 June

2020.

Quarter % Processed within standards

September 2019 50.1%

December 2019 98.1%

March 2020 53.1%

June 2020 95.8%

Average 75.6%

Cohort: All members

The table shows the overall performance results reported by the Fund administrator for each quarter to 30 June 2020.


Complaints: The Fund received and resolved one complaint in the year to 30 June 2020 in relation to a member

statement where the death benefit did not correctly reflect the member’s part-time status. This was less than the

Trustee’s risk tolerance for member complaints.

Member Outcome 1: Options, Benefits and Facilities


MEMBER OUTCOME 1

Most service standards have not achieved targets.

Comment

Educational Resources and Calculators

Website provides factual information.

Members are directed to the ASIC calculators.

The Fund’s annual report includes educational

information.

Investment Options

Members can choose any mix of options and

can choose different options for account

balance and future contributions. The Fund

does not offer direct options or ESG options.

Member centre for online transactions – e.g. switching investment

options, updating personal detailsAvailable to all members.

Account based pension facilities The Fund does not offer account based

pensions.

Voluntary insurance Employee and Spouse members only.

Auto-consolidation service Available in the member centre.

Phone Inquiries (1800 number) Sydney number if calling from overseas.

Financial Advice Members are referred to the FPA or TWA.

Cohort: All members

Examples of services offered to all Fund members are shown in the table below.

Complaints were within the Trustee’s risk tolerance.

Services offered to members are appropriate and in line with peer group funds, and complaints are

within the Trustee’s risk tolerance.


Implement investment strategies for each investment

option that are consistent with the return and risk


Member Outcome 2



0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

9.0%

30/06/2019 30/06/2020

Retu

rn (

% p

.a.)

Aggressive: 5 year average return

TWSF SR50 Growth (77-90) Index

Member Outcome 2: 5 and 10-year returns at or above median


MEMBER OUTCOME 2

The 5-year and 10-year investment returns (net of investment fees and tax) for the Diversified Shares

investment option are above the median in at least 3 out of the last 5 periods.

The chart above shows the comparison of the 5-year Investment Return (net of investment fees and tax) to the median return

in the SuperRatings survey for the Aggressive option. Based on the APRA Heatmap methodology for determining “Growth”

asset allocations, the Aggressive option would be right at the bottom of the SuperRatings Survey range of 77%-90% growth

assets.

Note the Aggressive option was introduced on 1 December 2013 and therefore no 10-year investment returns information is

available.

The return measure is below the respective medians in the last two 5-year periods.

Aggressive option

Cohort: All members

The 5-year investment returns (net of investment fees and tax) for the Aggressive investment option

are not above the median in the last two 5-year periods.




MEMBER OUTCOME 2

The 5-year and 10-year investment returns (net of investment fees and tax) for the Balanced


The charts above show the comparison of the 5-year and 10-year returns (net of investment fees and tax) to the median return

in the SuperRatings survey for the Growth option. Based on the APRA Heatmap methodology for determining “Growth” asset

allocations, the Growth option would be right at the bottom of the SuperRatings Survey range of 60-76% growth assets.

Both return measures are below their respective medians in at least 3 of the last 5 periods.

Growth option

Cohort: All members

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

30/06/2016 30/06/2017 30/06/2018 30/06/2019 30/06/2020

Retu

rn (

% p

.a.)

Growth: 5 year average return

TWSF SR50 Balanced (60-76) Index

The 5-year investment returns (net of investment fees and tax) for the Growth investment option are

not above the median in at least 3 out of the last 5 periods.

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

30/06/2016 30/06/2017 30/06/2018 30/06/2019 30/06/2020

Retu

rn (

% p

.a.)

Growth: 10 year average return

TWSF SR50 Balanced (60-76) Index




MEMBER OUTCOME 2




in the SuperRatings survey for the Balanced option. Based on the APRA Heatmap methodology for determining “Growth” asset

allocations, the Balanced option would be right at the bottom of the SuperRatings Survey range of 41%-59% growth assets.

Note the Balanced option was introduced on 1 December 2013 and therefore no 10-year investment returns information is

available.


Balanced option

Cohort: All members

The 5-year investment returns (net of investment fees and tax) for the Balanced investment option are

not above the median in the last two 5-year periods.

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

30/06/2019 30/06/2020

Retu

rn (

% p

.a.)

Balanced: 5 year average return

TWSF SR25 Conservative Balanced (41-59) Index




MEMBER OUTCOME 2




in the SuperRatings survey for the Moderate option. Based on the APRA Heatmap methodology for determining “Growth” asset

allocations, the Moderate option would be at the lower end of the SuperRatings Survey range of 20%-40% growth assets.

Note the Moderate option was introduced on 1 December 2013 and therefore no 10-year investment returns information is

available.


Moderate option

Cohort: All members

The 5-year investment returns (net of investment fees and tax) for the Moderate investment option are

not above the median in the last two 5-year periods.

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

30/06/2019 30/06/2020

Retu

rn (

% p

.a.)

Moderate: 5 year average return

TWSF SR50 Capital Stable (20-40) Index




MEMBER OUTCOME 2




in the SuperRatings survey for the Cash option. Note the Cash option was introduced on 1 December 2013 and therefore no

10-year investment returns information is available.


Cash option

Cohort: All members

The 5-year investment returns (net of investment fees and tax) for the Cash investment option are not

above the median in the last two 5-year periods.

0.0%

0.2%

0.4%

0.6%

0.8%

1.0%

1.2%

1.4%

1.6%

1.8%

2.0%

30/06/2019 30/06/2020

Retu

rn (

% p

.a.)

Cash: 5 year average return

TWSF SR50 Cash Index


AggressiveGrowthBalanced

Moderate

0%

2%

4%

6%

8%

10%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Retu

rn (

% p

.a.)

% Growth Assets

5 Year return for TWSF compared to peer funds (net of tax and administration & investment fees)

Investment return / risk trade-off


MEMBER OUTCOME 2



All options

Cohort: All members

The 5-year investment returns (net of investment fees and tax) for the Cash investment option are not

above the median in the last two 5-year periods.

This chart shows TWSF’s 5-year average investment return vs % Growth Assets for each of the pre-packaged investment options,

compared to the reported data for SR Peer funds as at 30 June 2020. The dotted line shows the ‘best fit’ curve calculated us ing

regression analysis based on the data and represents the expected level of 5-year investment return for a portfolio with each level of

Growth Assets.

This metric does not directly relate to one of the specified member outcomes, but is informative in understanding the performance of

the Fund’s diversified pre-packaged options relative to the SR Peers.


Member Outcome 2: Achieve investment return objectives in 10 years


MEMBER OUTCOME 2

The average return is slightly below the return target for the Cash option.

This chart shows the comparison of

the average return (net of

investment fees and tax) achieved

to 30 June 2020 by each

investment option to the investment

return objective target as set out in

the Fund’s Investment Governance

Framework (IGF).

Note that whilst all options have a

investment return objective

measured over 10 years, only the

Growth option has a full 10 year

history to review. For the other

options, the return objective is

measured over the full year periods

since inception (6 years).

Cohort: All members

The average return is above the return objectives for all options.

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

Aggressive (6 years)

Growth (10 years)

Balanced (6 years)

Moderate (6 years)

Cash (6 years)

Retu

rn (

% p

.a.)

Investment return objective to 30 June 2020

Average annualised return to 30 June 2020(time horizon specified by investment option)

Investment return objective to 30 June 2020


Member Outcome 2: Frequency of negative annual returns


MEMBER OUTCOME 2

The frequency of negative returns is below the tolerance limit set by the Trustee.

Investment OptionTarget Frequency of

negative annual returns

Number of negative annual returns

realised in 20 years to 30 June 2020

Aggressive Approximately 5 in 20 years 0*

Growth Approximately 5 in 20 years 4

Balanced Approximately 4 in 20 years 0*

Moderate Approximately 3 in 20 years 0*

Cash Approximately 0 in 20 years 0*

Cohort: All members

• Option commenced 1 December 2013. Number of negative annual returns shown since inception.

• Annual returns are measured for years ending 30 June only.


Member Outcome 2: Expected risk/return characteristics consistent with IGF


MEMBER OUTCOME 2

The Trustee’s investment consultant reviewed the investment strategy in November 2020. The Trustee

agreed to make the recommended changes.

This outcome is assessed by the Trustee as part of its annual investment strategy review as required under SPS 530.

The most recent annual review of the investment strategy prepared in November 2020 recommended changes to the

strategic asset allocations for the Fund, including:

▪ Terminating the Schroders Real Return Fund

▪ Increasing the exposure to listed growth assets across all options

▪ Adding exposure to Global Listed Infrastructure by appointing Maple-Brown Abbott

▪ Adding listed real asset exposure to the Moderate option

▪ Re-weighting the allocations to AQR and Fulcrum DAR using the Schroders proceeds

The Fund’s investment consultant advised that taking into account the economic outlook and model portfolios, the

recommendations aim to improve portfolio diversity, efficiency, and downside protection, while bringing overall level of

risk in the portfolio more in line with the model portfolios and peers.

At its meeting in December 2020 the Trustee agreed to make the recommended changes.

Cohort: All members


Provide standard and additional voluntary death and TPD

benefits that are appropriate to members at reasonable cost

Member Outcome 3



Member Outcome 3: Insurance Strategy


MEMBER OUTCOME 3

The trustee’s investment advisor reviewed the investment strategy in December 2019, and concluded

that the Trustee retains the existing objectives for each investment option and no changes were

recommended at that time.

The Trustee, in conjunction with the Company, has elected to provide a standard level of death and TPD cover to all

eligible members. The cost of the standard cover is paid for by the Company. Members who require additional

insurance cover beyond the standard level can apply for additional voluntary insurance cover. The cost of any

additional cover is deducted from the member’s account balance and any voluntary cover can be reduced or cancelled

at any time. The Trustee considers that such an arrangement ensures that all eligible members are insured for a base

level of cover, and members can determine whether to take out additional cover having regard to their personal

circumstances including need, the cost of cover and the amount of their account balance.

The Trustee notes that the Company provides disability income (or salary continuance) benefits to its employees via an

insurance policy owned by the Company. This policy includes an offset clause such that the benefit payable to an

insured life who becomes disabled is reduced having regard to the amount of any other disability income benefit

received by the insured life. Accordingly, the Trustee has determined not to offer salary continuance benefits to any

members of the Fund.

Background


Member Outcome 3: Comparison of standard insurance cover levels


MEMBER OUTCOME 3

Overall, the Fund’s standard cover level at age 30 compares favourably with peer group funds.

The chart provides a comparison of the

Fund’s standard insurance cover levels for

a member aged 30 with a super salary of

$100,000 against peer funds.

The default cover levels for both Death and

Total and Permanent Disablement (TPD) for

eligible Fund members is calculated as 15%

of salary x years to age 65.

The default cover levels for both Death and

TPD are greater than all of the peer funds.

We note that AMP SignatureSuper, BT

Lifetime Super, Colonial First State Super,

Mercer and MLC provide insurance cover

that is generally tailored for each employer

fund and that information is not publicly

available.

Cohort: Employee members

Hypothetical member: age 30, Salary $100,000, white collar (or low risk) rating

-

100,000

200,000

300,000

400,000

500,000

600,000

Cove

r A

mount

($)

Death & TPD Cover: Male - Age 30

Death TPD




MEMBER OUTCOME 3






The default cover levels for both Death

and TPD for members is calculated as

15% of salary x years to age 65.


and TPD are greater than most of the peer

funds.





Fund and that information is not publicly

available.



-

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

450,000

Cove

r A

mount

($)


Death TPD




MEMBER OUTCOME 3







and TPD for members is calculated as

15% of salary x years to age 65.


and TPD are greater than most of the peer

funds.





Fund and that information is not publicly

available.



-

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

450,000

Cove

r A

mount

($)


Death TPD


Member Outcome 3: Insurance fees do not inappropriately erode retirement

benefits


MEMBER OUTCOME 3

Insurance fees deducted from member accounts do not inappropriately erode retirement benefits.

The Company currently meets the cost of standard insurance cover for all Employee members. Therefore insurance

fees for standard cover are not deducted from Employee member accounts.

Employee members have the option to apply for voluntary death & total and permanent disablement insurance cover.

The insurance fee for one unit of death and TPD cover is $0.40 per week ($20.80 pa), while one unit of death only

cover is $0.30 per week ($15.60 pa). The insurance fees for this voluntary insurance cover compare very favourably

against the insurance fees in peer funds for the same level of cover (refer to following slides). There are currently only

2 members with voluntary insurance, 1 male and 1 female. For the purpose of this assessment we have looked at the

male premium rates.

Cohort: Employee and Spouse members


Member Outcome 3: Insurance fees do not inappropriately erode retirement

benefits


MEMBER OUTCOME 3

Insurance fees deducted from member accounts do not inappropriately erode retirement benefits.

On the following slides we compare the voluntary insurance fees in the Fund relative to peer funds.

2 members (less than 1% of the membership) have taken out voluntary insurance cover. 1 is male and 1 is female.

For the purpose of this assessment we have compared the voluntary insurance fees for death and TPD for male

Employee members.

It can be seen that the voluntary insurance fees for male Employee members are lower than the insurance fees in the

majority of peer funds at all ages.

Cohort: All members


Member Outcome 3: Comparison of voluntary cover insurance fees


MEMBER OUTCOME 3

The chart provides a

comparison of the Fund’s

voluntary insurance fees for a

member aged 30 (per $,000

of cover).

The voluntary insurance fees

for Death and TPD are lower

than the majority of peer

funds.

The Fund’s voluntary insurance fees for Death and TPD are comparable with peer group funds.


Hypothetical member: Male, age 30, white collar (or low risk) rating

0.0

0.5

1.0

1.5

2.0

Annual P

rem

ium

per $,0

00 D

eath

/ T

PD

Death/TPD Voluntary insurance fees (per $,000 cover): Male - Age 30




MEMBER OUTCOME 3





of cover).




funds.




0.0

0.5

1.0

1.5

2.0

2.5

Annual P

rem

ium

per $,0

00 D

eath

/ T

PD





MEMBER OUTCOME 3





of cover).




funds.




0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

Annual P

rem

ium

per $,0

00 D

eath

/ T

PD



Maintain sufficient scale to achieve desired member

outcomes

Member Outcome 4



Member Outcome 4: Sufficient scale to achieve member outcomes


MEMBER OUTCOME 4

We understand that APRA considers member outcomes relating to scale should encompass a range of factors including

the following:

▪ relationship between number of accounts and the operating costs of the business operations, including trends in

cost per member measures

▪ impact of size on investment strategy, such as access to investments in certain asset classes

▪ degree of bargaining power with service providers and access to any volume-related discounts

▪ opportunity to pool risk, relevant in the context of certain retirement and insurance products

These are considered on the following slide.

Cohort: All members

Outcome not assessed. Metrics to be reviewedFees are charged to members based on a fair and reasonable allocation of costs.


Member Outcome 4: Sufficient scale to achieve member outcomes

▪ Relationship between number of accounts and the operating costs of the business operations, including trends in cost per

member measures ▪ The Company meets the operating costs for Employee members of the Fund.

▪ Impact of size on investment strategy, such as access to investments in certain asset classes▪ The Trustee uses Willis Towers Watson as the Fund’s investment consultant. The Trustee invests in all major asset classes via mandates with

specialist investment managers for each asset class.

▪ The Trustee has access to actively managed international equities through the GQG Partners Global Equity Fund and the Polaris Global Equity Fund.

▪ The Trustee cannot invest in direct infrastructure due to its size, however it has access to infrastructure through the Maple-Brown Abbott Global Listed

Infrastructure Fund. The initial investment into this product was completed in February 2021.

▪ The Trustee has access to direct property through the Resolution Capital Global Property Securities Fund.

▪ The Trustee has access to diversifying assets such as the Alternative Risk Premia through the AQR Global Risk Premium Fund, Fulcrum Diversified

Absolute Return Australian Unit Trust and the Schroder Real Return Fund. The Schroder Real Return Fund will be fully redeemed by the end of

February 2021 as a result of the most recent annual review of the investment strategy prepared in November 2020.

▪ Degree of bargaining power with service providers and access to any volume-related discounts ▪ The Trustee outsources the administration to Australian Administration Services (AAS) via an outsourced agreement with Towers Watson Australia Pty

Ltd. The Trustee uses AAS as the administrator for all funds under trusteeship and therefore has access to volume-related discounts that are based on

the combined membership of all funds under trusteeship.

▪ The Trustee’s investment consultant, Willis Towers Watson negotiates fee reductions from the Fund’s investment managers. The investment consultant

is able to negotiate fee reductions based on the combined assets under management for Willis Towers Watson investment consulting clients.

▪ The Trustee has negotiated discounts for some audit services (e.g. RMF audit) based on the combined membership of all funds under trusteeship.

▪ Opportunity to pool risk, relevant in the context of certain retirement and insurance products▪ The Fund does not offer a retirement product and pools insurance risk over and above the amount of each member's account balance via a group

insurance contract with a major insurer.

▪ As evidenced from the results from the analysis of Outcome 3, the Fund has very favourable insurance fees and therefore the Fund has sufficient scale

to provide insurance benefits at a competitive cost.


MEMBER OUTCOME 4

Where any other Member Outcome has failed, the cause is not lack of scale.


Fair and reasonable allocation of activity based fees to

members

Member Outcome 5



Member Outcome 5: Fair and reasonable allocation of activity-based fees to

members


MEMBER OUTCOME 5

Cohort: All members


Effective Date of PDS 24/08/2016 1/12/2017 8/02/2019 1/07/2019 7/12/2020

Family Law Information Fee $252 $252 $262 $262 $262

Change in Fees - 0.00% 3.97% 0.00% 0.00%

Fees are charged to members based on a fair and reasonable allocation of costs.

Effective Date of PDS 24/08/2016 1/12/2017 8/02/2019 1/07/2019 7/12/2020

Family Law Splitting Fee $227 $227 $236 $236 $236

Change in Fees - 0.00% 3.96% 0.00% 0.00%

The only activity-based fees charged to members of the Fund are in relation to Family Law information requestions and

splitting and only one member has needed to make a Family Law information request.


Representative member fees and costs


Annual fees for representative members are not consistently above the median of relevant peer group

funds.

The chart shows total fees for a

representative Employee or

Spouse member with an account

balance of $50,000.

The Fund’s total fees are

consistently below the median.

Note the employer pays for the

Administration fees for all

members.

The $50,000 balance

comparisons are based on

publicly available information (eg

PDSs).

Cohort: All members

Note: Investment fees, administration costs and indirect costs are included. Other fees that may apply are excluded from this outcome.

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

Aggressive Growth Balanced Moderate Cash

Fees (

% o

f bala

nce)

Total Fees

0 - 25th percentile 25th - 50th percentile 50th - 75th percentile 75th - 100th percentile TWSF


Manage Operating Costs


Annual fees for representative members are not consistently above the median of relevant peer group

funds.

Year 2015/2016 2016/2017 2017/2018 2018/2019 2019/2020

Operating Costs

($’000)90 108 141 124 120

Average Net

Assets ($’000)32,122 34,079 37,494 38,179 37,509

Operating Cost

Ratio (OCR)0.28% 0.32% 0.38% 0.32% 0.32%

% change in OCR 13% 19% -14% -2%

* All members pay Activity fees on a user pays basis, e.g. family law fees.

Source: Fund’s Financial Statements


Maintain funding of the defined benefit section at satisfactory

level to deliver defined benefits for members entitled to a

defined benefit

Member Outcome 6



Member Outcome 6: Defined Benefit Funding


MEMBER OUTCOME 6

Cohort: Defined Benefit members


At 30 June 2020, the Defined Benefit Vested Benefits Index (VBI) was 117.0%

Vested Benefits Index was not less than 100% at 30 June 2020.


Contacts


Phil Patterson, Director

▪ [email protected]

▪ +61 2 9253 3106

Daniel Ham, Assistant Director

▪ [email protected]

▪ +61 3 9253 3168

D: DH | TR: JD | CR, ER:PP

Documents

Trial Outcomes Assessment Report