Best of the Best 2022: Best Pension Fund
Cbus has won the Best Pension Fund for the third consecutive year for its sharply priced, flexible retirement product offering strong investment returns over the long term.
The $65 billion fund, originally set up for the building and construction industries but now open to the public, takes its retirees' needs seriously. As well as an income-stream product it offers support services including advice for their retirement years.
Justin Arter, Cbus CEO, says once members reach about 50 they become quite engaged with the fund, wanting to know about how much they need in retirement and how to invest and preserve their savings for the long haul.
Cbus members are loyal and typically roll their accumulation money into the pension phase. They benefit from the fund's high returns, which reached 19.34% for its growth option for the 2020-21 financial year, the highest so far.
As well, the Cbus pension fees are low. There's a $2 per week administration fee, plus a 0.19% assets fee up to a maximum of $1000 a year, as well as an investment management fee that is 0.39% for the default, the conservative growth option.
Arter says controlling fees help boost members' balances and pensions. "Fees and expenses slippage can add up and are corrosive for super savings."
Cbus has a diverse and active portfolio of major asset classes. Over 35% of investments are directly managed by the Cbus's in-house team, saving members more than $400 million in investment fees over the past four years. As well as 120 investment staff, Cbus is a market-leading property developer - it has high ESG standards and is run by 40 property experts. Arter says the property division has returned a robust 15% since inception, much higher than the listed real estate investment trust sector.
Cbus caters for a unique membership, many of whom work in the construction industry. They typically have broken work patterns, numerous employers and unforeseen early retirement due to physical injury. Cbus offers an account that provides a regular income stream during the final years of work and into retirement.
Once members stop work and reach their preservation age - currently 60 for anyone born after 1964 - the income stream is tax free. It can be set up with as little as $10,000.
Cbus has 25 in-house staff providing free advice, including seminars about the financial aspect of retirement as well as the emotional wrench of leaving the workplace and colleagues. Arter says they are popular and sell out. It also offers one-off information on certain superannuation topics.
The average amount invested in Cbus's pension phase is $330,000. This means that many members will receive a part age pension, depending on the income and assets tests.
"The reality is that the vast majority of people will retire with a mortgage and they want to pay that off, using their superannuation," says Arter.
If members want a comprehensive financial plan, Cbus has an arrangement with the Financial Planning Association for a consultation with a qualified adviser. The fee is deducted from the member's Cbus superannuation account.
Contrary to views that people spend up when they retire, Cbus's experience is that they are careful about making their savings last. If they retire in their 50s, they can't access their super until they reach their preservation age.
Cbus will grow even bigger in mid-2022 when it merges with Media Super, a $6 billion fund for the print, media, arts and entertainment industries.
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