Cbus opens property door to members
The building and construction industry fund is also closer to finding a way for members to invest in residential property through the fund, and agreed to a trial allowing certified financial planners to advise its 700,000-plus members.
"The issue for us is opening up the product range," said Cbus chief executive David Atkin at a Deloitte Financial Services Council lunch in Melbourne. "Having a better response to self-managed funds, because it's clearly attractive.
"We've been slower than others but we will in 2014 be producing our own self-managed offering, which will include unlisted property and infrastructure."
Self-managed funds and "retail" funds run by banks hold 58 per cent of Australia's $1.6 trillion in retirement savings, figures from the Australian Prudential Regulation Authority show.
By contrast, industry funds and public sector funds hold 36 per cent. Self-managed funds have been among the fastest-growing sectors of the market.
Mr Atkin said Cbus members "like the idea of investments in bricks and mortar".
He said: "If an accountant or an adviser out there was talking to you about self-managed funds, you get the same flexibility but in the protection of an industry fund and low cost, plus you get access to assets that you would not get in a self-managed fund environment, through our unlisted assets in property and infrastructure."
Mr Atkin also warned the looming financial services inquiry against arguing the shift of national savings to superannuation from bank deposits was a bad thing.
"Banks are already an enormous part of the economy ... and they already have an extensive reach through the economy - they are involved in superannuation, financial advice, insurance, residential housing," he said.
"I would argue, as you'd expect, that superannuation has added to the quality and strength of the financial services sector and beyond. Most Australians would assess the merits of superannuation against its capacity to provide retirement income, rather than the impact of their ... savings on banks."
Mr Atkin said the jury was still out on whether the industry could make a smooth transition from the accumulation phase to the pension phase as baby boomers retire. But he predicted the industry would grow more confident about speaking on macro-economic issues as it increasingly performed roles in-house, rather than relying on external financial services providers.
Frequently Asked Questions about this Article…
Starting next year, Cbus will allow its members to invest directly in infrastructure and unlisted property. This move aims to provide more investment flexibility and retain members who might otherwise consider self-managed super funds.
Cbus is introducing these options to prevent the loss of wealthy members who are setting up self-managed super funds. By offering direct investments in infrastructure and unlisted property, Cbus aims to provide similar flexibility and appeal to its members.
Cbus plans to compete by offering a self-managed fund option that includes investments in unlisted property and infrastructure. This will provide members with the flexibility of self-managed funds while maintaining the benefits of an industry fund, such as low costs and access to unique assets.
Cbus is working towards allowing its members to invest in residential property through the fund. They have agreed to a trial that will enable certified financial planners to advise their members on such investments.
Self-managed and retail funds, which are often run by banks, hold 58% of Australia's $1.6 trillion in retirement savings, according to the Australian Prudential Regulation Authority.
Investing in Cbus's new offerings provides the flexibility of self-managed funds but with the added protection and lower costs of an industry fund. Additionally, members gain access to unlisted assets in property and infrastructure that may not be available in a self-managed fund environment.
Cbus believes that superannuation has strengthened the financial services sector by providing retirement income and enhancing the quality of financial services. They argue that the shift of national savings to superannuation is beneficial for the economy.
Cbus acknowledges that the transition from accumulation to pension phase as baby boomers retire is uncertain. However, they predict that the industry will grow more confident in addressing macro-economic issues as it increasingly performs roles in-house.
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