Andrew Kleinig

AustralianSuper, Australia’s largest superannuation fund, today announced it has increased the program size of its partnership with Churchill Asset Management, an investment specialist affiliate of Nuveen, to US$1.5 billion.

The investment program targets senior and unitranche loans to private equity-backed U.S. middle market companies and builds on the partnership established in December 2022.

AustralianSuper has over US$4.5 billion (A$7 billion) invested in private credit globally, with the stated ambition to triple its exposure in coming years through a mix of direct lending by its in-house private credit team and strategic partnerships with best-in-class specialist managers such as Churchill.

AustralianSuper was ranked as the 18th largest pension fund in the world^[1] earlier this year in the Pensions and Investments / Thinking Ahead Institute’s Global Top 300 Pension study.  The Fund manages more than $300 billion of retirement savings on behalf of its 3.3 million members. AustralianSuper is looking to increase its investments in private credit as it is an asset class which could have the potential to provide attractive income, returns and stability during uncertain economic times.

Nuveen’s 2023 EQuilibrium survey found that over 80% of global institutional investors were planning to expand their reach for yield. Nearly half of those respondents were revisiting their traditional fixed income allocations, and the next most popular course of action was investment into private credit.

Churchill is the US$47 billion U.S. private capital investment-specialist of Nuveen, the asset manager of TIAA. Churchill has an established 17-year track record of disciplined investing in middle market senior loans across economic cycles and was recently ranked as the #1 most active U.S. direct lender in Q3 2023 by KBRA Direct Lending Deals^[2] . The firm reached a record high in activity in 2022 as it invested US$11 billion in over 375 transactions across senior lending, junior capital, equity co-investments and private equity fund commitments.

Churchill first partnered with Nuveen as the firm’s exclusive middle market senior and unitranche debt financing group in 2015. In 2022, Nuveen expanded its private debt platform with the acquisition of Arcmont Asset Management, covering the European market.

Ken Kencel, President and CEO of Churchill said: “We are excited to grow our partnership with AustralianSuper, Australia’s largest superannuation fund, and increasingly an investment leader on the global stage. AustralianSuper’s latest instalment reinforces the strength of our strategic partnership and their confidence in both our strategy and the private credit market. We believe we are currently in one of the most attractive investment environments in recent history, and we are pleased to provide AustralianSuper differentiated access to our directly originated, proprietary senior loan assets.”

AustralianSuper Head of Private Credit Nick Ward said: “We believe the current environment is especially appealing to increase our investments in private credit. Lending margins have increased due to heightened macroeconomic risks, base rates have gone from zero to 5% so you are now looking at yields of 10-12% for senior lending to middle market companies^[3] .

We believe Churchill is a best-in-class loans manager. Together with their long track record and being able to underwrite loans with knowledge of the higher rates environment represents an attractive risk-adjusted proposition.”

Andrew Kleinig, Managing Director and Head of Australia at Nuveen, said: “We are delighted to expand our remit with AustralianSuper and further extend what has been a very successful partnership to date. We’ve seen a well-documented increase in the search for yield around the world.

​This rings especially true in Australia’s superannuation market as ever-growing funds, and an aging population, mean post-retirement stage members are driving increased demand for consistent income opportunities.

Nuveen Private Capital is uniquely equipped with specialist partners, including Churchill and Arcmont Asset Management in Europe, to meet the demand for private capital from AustralianSuper and other local institutional investors.”

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[1] “World’s top pension funds see the largest assets fall in 20 years”. WTW. Retrieved 20 October 2023.
[2] KBRA Direct Lending Deals League Tables – H1 2023 and Q3 2023.
[3] Represents spread plus the greater of 3-month base rate, or base rate floor, if applicable, plus amortization of OID over 3-year assumed loan life. Portfolio yield is only one component of expected performance and is not and should not be viewed as a statement of the future performance of the strategy

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The merger will see AustralianSuper create a new Public Sector Division, which will capture and build upon AGEST’s position as a fund of choice for current and former public sector employees, and enhance AustralianSuper’s size, scale and national presence.
 
Both AGEST and AustralianSuper expect that the merged fund will result in improved retirement outcomes for members of both funds, adopting the best from both funds.
 
AGEST CEO Cath Bowtell said today: “This is good news for AGEST members.  The Board of AGEST has identified around $13 million per annum in savings through the merger.  These savings, which are a result of lower administration and investment costs, will go straight to members’ accounts.”
 
“We have also been able to secure changes to AustralianSuper’s offer to reflect the current features of AGEST that our members value.”
 
 As a result of this merger, AustralianSuper will expand its member services in Canberra and Darwin, introduce daily switching, and roll out a very competitive pension fee.
 
“AGEST members have told us that they value these services and I’m pleased that AustralianSuper quickly recognised the benefit to their members of extending these to all members of the merged fund” said Ms Bowtell.
 
However, the merger is not guaranteed, with both funds approving the merger only if the government grants the merging funds relief from realising capital gains and losses when assets transfer from AGEST to AustralianSuper.
 
“The AGEST Board has approved the merger, subject to receiving Capital Gains Tax rollover relief.  Without rollover relief, the merger will not occur” said Ms Bowtell.
 
“Having identified savings for our members, we are keen to get on with the merger and deliver those savings into members’ accounts.  For every month of delay, we fail to realise $1 million worth of savings” said Ms Bowtell.
 
Ian Silk, Chief Executive of AustralianSuper agrees that the uncertainty is preventing mergers from occurring and disadvantaging members. “AustralianSuper firmly believes that members of funds in a merger, must not be placed in a worse tax position after a merger then before the merger.”

“This is a revenue-neutral policy for the Government, because if this change is not made most trustees will simply not proceed with mergers whilst there is a financial disadvantage to their members.”

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In this role, Mr. McKeand will be responsible for the development and implementation of a comprehensive strategy for the construction and management of AustralianSuper’s equities portfolio, which consists of both Australian and international equities across developed and emerging markets.

He will report to AustralianSuper’s Chief Investment Officer, Mark Delaney. Mr. Delaney said the appointment of Mr. McKeand is part of AustralianSuper’s long-running strategy to build world-class, in-house investment capabilities.

“AustralianSuper is a major investor in equities with over $24 billion in our portfolio. Innes’ role will be instrumental not only in growing our equities investments, but also in extracting more value from the portfolio to continue to maximise our members’ returns,” said Mr. Delaney.

“Over the last few years we have focused on growing our in-house investment expertise and now have over 30 investment professionals on the team. Our in-house investment expertise ensures AustralianSuper is in a position to continue to provide strong long-term investment returns to our members.” 

AustralianSuper has returned an average of 6.13 per cent per year, 1.2 per cent above the median fund return, over the ten years to June 2011. This performance places AustralianSuper in the top quartile of performers ten out of thirteen times since 1998, more often than any other fund*.

Mr. McKeand joins AustralianSuper from Aegon Asset Management in the UK, where he was Head of Equities. Prior to this, he was Chief Investment Officer at AIB Investment Managers. Before joining AIB, he was Head of Investment at the Nestlé UK Pension trust and spent 14 years with ScottishLife Assurance Company as Chief Investment Officer.

Mr. McKeand commences his role as Head of Equities at AustralianSuper on 12 September.

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AustralianSuper today announced the appointment of Nickie Scriven to the newly-created position of Head of Brand.  Ms. Scriven started with AustralianSuper yesterday.

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Ms. Scriven will report to James Coyle, General Manager of Marketing and Communications.

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Mr. Coyle said that Ms. Scriven will play a key part in achieving AustralianSuper’s objective of becoming the iconic brand in the Australian superannuation industry.

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“The new position of Head of Brand has been established to ensure the AustralianSuper brand continues to develop strongly.

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“Brand strength is a key driver of growth and scale and scale is the key means by which AustralianSuper will continue to deliver improved benefits to our members.  These benefits include reduced costs through scale economies and the negotiating power that allows us to provide our members with better products and services, a better group insurance offer and a better suite of member educational materials.

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“This is a very important role for the fund and I am looking forward to Nickie driving the development of our brand as the leading superannuation brand in the country.”

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Ms. Scriven has extensive experience in strategic marketing across retail and financial services. Before joining AustralianSuper, she was founder and director of investment and marketing consultancy Budding Enterprises Australia. Previous roles also include Media Strategy Principle – Strategy and Marketing for NAB and Group Advertising Sales Manager for News Limited.

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Ms. Scriven has a Bachelor of Arts in Performance Studies and a Masters of Marketing from Monash University.

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In a statement likely to have lasting implications for the financial advice and superannuation industries, AustralianSuper today declared that the FoFA reforms have created an environment in which the Fund and selected planner groups can work together in the interest of members.

The dramatic shifts in the advice and superannuation environments in the wake of the Cooper Review, the Ripoll Report and now the FoFA reforms, will lead to a shift in how Industry Super Funds and advisers work together, provided the FoFA reforms proceed in full. Although traditionally cast as enemies, according to Ian Silk, Chief Executive of AustralianSuper, the two groups should have strongly aligned interests.

Certainly the strong positive outcomes of a continuing trial involving AustralianSuper and a panel of representatives from some of Australia’s leading advice firms and dealer groups provides evidence of this.

“For the past twelve months or so we have been working with advice industry leaders trialling and building a new service that will enable us to work together more effectively and in the best interest of members,” said Mr Silk. “This includes addressing the vexed question of fees and other issues that have presented stumbling blocks in the past. Thus far in the trial we have worked through a number of these issues and will continue to do so as the trial continues over the next nine months or so.

“AustralianSuper has always been a major supporter of good, sound advice. What we do not support is the commission structure of so many super products that leads to conflicted advice. As we look towards new, clearer legislation relating to commissions and requiring an adviser to act in a clients best interest, we are seeing many of the more progressive advisers working to build fee-for-service and other models of advice into their practices.”

Mr Silk went on to say that AustralianSuper has always focused on providing better value super through lower fees and strong long term performance and by breaking down the wall with advisers more people will now have more money in their retirement.

“Essentially we see this as part of our broader advice strategy, along with our member education programs, online and workplace seminars, our call centres and the fund’s strong relationship with Industry Fund Financial Planning.”

Mr Silk said that, for advisers, the trial has opened wider possibilities for advising and meeting the needs of their clients, potentially saving clients tens of thousands of dollars in fees, enabling access to a leading fund and giving advisers more control over a client’s full portfolio.

“This may not have been as simple at a time where industry super funds and advisers essentially occupied separate worlds, so where a client held super outside the adviser’s remit, the adviser may not have had such an opportunity.”

Firms which have been participating in the trial include Godfrey Pembroke, Matrix Planning Solutions, Dixon Advisory, Woods & Partners, Paul Moran, Switzer Financial Planning. They have also identified a number of advantages of the approach so far.

Tom Reddacliff, General Manager of Godfrey Pembroke said, “We are delighted to be working with AustralianSuper and believe this strategic alliance benefits our two organisations, advisers and most importantly members.

“Godfrey Pembroke was the first major licensee to introduce fee-for-advice on all new investment and superannuation clients back in 2006. Our advisers believed this was in the clients’ best interests and was the right thing to do.

“This commitment to fee-for-advice closely aligns our organisations and makes Godfrey Pembroke a natural provider of trusted financial advice to AustralianSuper members. Furthermore, Godfrey Pembroke guarantees it will not receive a single cent of commission from any AustralianSuper member.”

Another participant in the trial, Rick Di Cristoforo, Managing Director of independently owned advice firm Matrix Planning Solutions, said “Matrix has always been committed to providing quality advice, including administration and product solutions that are best suited to our clients’ needs.

“Our research confirms our belief that industry funds can play an important role as an efficient and competitive superannuation solution for a wide cross section of working Australians, and in our view, AustralianSuper is a clear market leader.

“We are delighted to be working with AustralianSuper as part of this advice partnership.”

As the trial continues, the focus is on continuing to resolve various logistical issues associated with ensuring a smooth and workable proposition for all concerned.

Ian Silk further states, “What we are most pleased about is that the fundamentals are sound. We have the ingredients and commitment we need to meet our mutual aims and that can only be the start of a very good thing for members.”

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AustralianSuper has today announced the appointment of Western Australian-based Simone McGurk as a Director on the AustralianSuper Trustee Board.

Ms McGurk is currently a Director of the Westscheme superannuation fund, a Western Australian State Training Board member, the UnionsWA Secretary and a member of the ACTU executive.

Elana Rubin, Chair of AustralianSuper, said she was delighted to welcome the first West Australian-based representative to its Board.

“Simone McGurk is an outstanding appointment for AustralianSuper. She has a long history of member advocacy through her 20 years in the union movement.

“She has a strong insight into the issues facing Australian workers and an affinity with the ‘members first’ philosophy of AustralianSuper.

“Simone was a member of the Westscheme Board that demonstrated its ‘members first’ philosophy when it sought a merger with AustralianSuper, knowing our size, expertise and products would provide a positive difference to their retirement outcomes,” Ms Rubin said.

“Irrespective of the proposed merger with Westscheme, Simone is a high calibre appointment and one that reflects the growing geographic diversity of AustralianSuper.

“Simone’s appointment ensures the interests of West Australian members will be well represented and demonstrates AustralianSuper’s commitment to the successful finalisation of the merger,” Ms Rubin said.

Of the thirteen representatives on the Australian Board, seven are from New South Wales, five from Victoria and one from Western Australia.

Ms McGurk replaces Cath Bowtell, who is retiring after being a Director of AustralianSuper since June 2007. Ms Bowtell was an alternate Director from March 2006 and Director from 2007.

“We thank Cath Bowtell for her invaluable contribution to the AustralianSuper Board and wish her well in her future endeavours,” Ms Rubin said.

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“This would be great news for working Australians as AustralianSuper research shows that increasing the super guarantee to 12 per cent means the average Australian worker will be able to afford a more comfortable lifestyle in their retirement.

“For example, for a 20 year old earning $40,000 a year, an increase from 9 per cent to 12 per cent SG could mean over $90,000* more when they retire,”* Mr Silk said.

The Federal Government has announced that the recommendations of a review into its mineral resource rent tax had been accepted.  The new mining tax laws, which will see coal and iron-ore miners pay a resources tax, are expected to go to parliament by the end of the year.

“If passed, this would see the industry closer to that 12 per cent Super Guarantee.  This would make a substantial improvement to most people’s retirement living standards and the nation’s overall wealth,” stated Mr Silk.

“We are very supportive of the government’s commitment to increasing the SG to 12 per cent and encourage them to make this a reality sooner rather than later.”

According to Mr. Silk, certain proposals from the Government’s FoFA reforms will also play an important part in benefiting the community.  Elements such as annual opt-in and a ban on all volume based remuneration will assist all sectors of the industry to operate in the best interests of its members.

“It is essential that the industry supports these reforms, as they are in the best interests of all Australians and will help to build public trust in the investment industry,” explained Mr. Silk.

“We also urge MPs of all political hues to enact these reforms when the time comes as a matter of utmost national importance.”

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AustralianSuper announced today that it has appointed Jason Peasley to the newly-created role of Head of Infrastructure.

Mr. Peasley will commence with AustralianSuper on 14 April and will report to Mark Delaney, Chief Investment Officer.

Mr. Delaney explained that he was delighted to welcome Mr. Peasley to the team, and said that the appointment reflected the strategic importance of investment in infrastructure to AustralianSuper’s growth plans.

“AustralianSuper currently has over $5 billion in infrastructure assets and we plan to grow investments in this area significantly over the next few years,” Mr. Delaney said.

“Jason’s skills and expertise will complement those of the existing in-house team and our managers to help us achieve this goal.”

Mr. Delaney explained that investment in infrastructure was both strategically and philosophically important to AustralianSuper.

“Not only does investment in quality infrastructure projects have the potential to provide excellent returns for our members, but it also delivers benefits to the wider community in Australia,” he said.

“AustralianSuper currently invests in assets, such as Pacific Hydro, which are projects on a scale of national importance. We are looking to increase our holdings in assets of this scale and significance in future.”

Jason Peasley has over 16 years’ experience in infrastructure investment, working across infrastructure acquisition, finance and investment management in Australia, Europe and the United States.

Most recently, he was Founder and Director of Artisan Investment Managers, an independent boutique adviser for infrastructure investors and operators.

Prior to that, Mr. Peasley served as Director and Head of Transactions at Hastings Fund Management, and Director of Infrastructure at Deutsche Bank AG.

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AustralianSuper today announced its support for ASIC’s new personal finance website MoneySmart, launched this afternoon by the Prime Minister, Julia Gillard.

MoneySmart aims to help people make good financial decisions by providing free, independent and unbiased information, tools and motivation and is a key part of the National Financial Literacy Strategy, also launched today.

Ian Silk, Chief Executive of AustralianSuper and a member of the Australian Government  Financial Literacy Board, said that he was fully supportive of any initiative that could improve the financial wellbeing of Australians.

“AustralianSuper is strongly committed to helping both our members and the wider community make better decisions about their financial future, and particularly their super.

“We feel that the simple and straightforward information and tools available on MoneySmart will help consumers to get better educated about their finances and help them to maximise their financial and retirement outcomes.”

Mr. Silk added that AustralianSuper has seen from experience that there is demand from consumers for tools and resources that can help them make the most of their financial situations.

“We know from the popularity of the tools on our own website, such as the Retirement Income Calculator (RiC), that consumers are looking for this sort of accessible, easy-to-use information online.

“We think MoneySmart will be a great complement to steps already taken by organisations such as AustralianSuper in the superannuation space, and will help to educate and empower the community on wider financial matters.

“We would like to encourage others in the industry to follow this lead and focus on providing clear and accessible resources, in plain language, to their customers and to the wider community.”

www.moneysmart.gov.au

www.australiansuper.com/calculators

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