MTAA fund on the road to recovery, says Brumby
THE former Victorian premier John Brumby said it could still take two years to complete the turnaround of MTAA Super, but the fund had come a long way since he was brought in to heal the rift on the board.
The comments mark the first time Mr Brumby, pictured, has spoken so candidly about the prospects for the controversial industry fund, which for years has been in turmoil after a string of losses incurred since the global financial crisis led to a clean-out of its board and the dumping of its long-serving boss, Michael Delaney.
The $6 billion fund has also been the subject of inquiries by the Australian Prudential Regulation Authority, including for governance issues.
Mr Brumby, who was parachuted into the fund in March 2011 after it fell to the bottom of the performance league tables, said his tenure had been a "bit of a challenge".
"The fund had a big task [so] we've restructured the board, brought on new independent directors who've broadened out the skills base of the fund - Sue Dahn and Vicki Allen - we've changed the management, we've rebuilt relationships with industry groups and APRA, and we've successfully rebalanced and reduced our exposure to illiquid, unlisted assets with a better spread of investments and a lower-risk profile," Mr Brumby said.
"It will still take another year or two for us to turn the fund around completely but we're well back on the road to recovery."
The comments were made as MTAA Super released a guaranteed super stream product - the first large industry fund to do so - which guarantees a monthly pension for life regardless of whether one's account balance drops to zero for reason's other than excess withdrawals.
The product is designed to provide protection against a market downturn and "longevity risk", and will be payable as a pension.
"There's a growing number of people who are concerned that they'll have an annuity that runs until they're 85 but they'll live till 95," Mr Brumby said. "There are also people who are very worried about what happens if we get another GFC, particularly as they're either in retirement or they're very close to retirement. So this product addresses [those risks]."
Jeremy Cooper, the author of the Cooper Review into superannuation, said the industry was still behind the eight ball when it came to an ageing population, but products like these went some way to addressing it.
Commenting on the 20 per cent increase in the value of local shares in the past six months, Mr Brumby said MTAA Super had benefited from the pick-up.
"It has been significant for every fund so it's been a welcome turn-up," he said.
"Most importantly for beneficiaries who've gone year after year with minimal if not negative returns, they're back in the black with good numbers. That's true of our fund and it's true of virtually all of the industry funds, so that's a good thing."