CFS FirstChoice Pension

2022 Annual Outcomes Assessment

Colonial First State (CFS) FirstChoice Pension (FCP) is offered to pension members by Avanteos Investments Limited (AIL) (the trustee). The Outcomes Assessment for FCP, for the 2022 calendar year, concluded that the product is promoting the financial interests of members. This document provides a summary of the key findings of the Outcomes Assessment.

The assessment was conducted using various forms of data and comparative benchmark reports to analyse the performance of FCP relative to defined criteria, for example, investment performance rankings against other comparable products. The benchmarking data is obtained from various sources such as the Australian Prudential Regulation Authority (APRA), respected industry research houses and in-house member records.

Fees and costs 🗹

We assessed whether the fees and costs paid by FCP members (administration fees, and investment fees & costs) are competitive. In doing so, we used segmented member data to evaluate the fee and cost outcomes across the membership.

An analysis using research house data showed that 100% of FCP members are paying administration fees that are below median, making it amongst the cheapest within the superannuation industry.

The total fees and costs that members pay vary, depending on the investment options chosen. We found that more than 45% of FCP members are paying total fees which are ‘at median or cheaper’. We also compared the investment fees and costs on a investment category basis. Of the members who are paying higher than median total fee, higher investment fees were found to be comparable or better than similar investment options, and are therefore still considered appropriate.

Net returns 🗹

We assessed the level of investment returns delivered to members after the deduction of fees, costs and taxes.

Using industry research house data, when compared to investment options with comparable risk profiles and asset classes, we determined that more than 91% FCP investment options achieved an investment returns that was ‘at median or better’ over 1, 3, 5 or 7 years.

Level of investment risk 🗹

Using industry research house data, when compared to investment options with comparable risk profiles and asset classes, it was identified that more than 79% FCP investment options achieved an investment risk ranking, using the Standard Deviation method, that was ‘at median or better’ over 1, 3, 5 or 7 years.

Options, benefits and facilities 🗹

We worked with an independent research house to benchmark the quality of our member services against 50 key industry players. The overall finding of the review was that FCP member services are performing better than the median.

Investment strategy 🗹

We assessed the performance of each investment option, having regard to the stated investment objective and investment ratings given by various research houses. We also considered the suitability of the composition of the investment menu for members.

The investment menu of FCP is large compared to other master trust super funds, allowing members an extensive range of investment options to select from to build a diversified portfolio.

We determined that more than 85% of investment options delivered upon (and are expected to continue to deliver upon) their stated investment objectives over their stated investment timeframe. It was also identified that more than 86% of ‘on-menu’ investment options meets or exceeds the ‘Investment Grade’ ratings by multiple research houses.

Sustainability 🗹

Scale is important as it allows AIL to meet its commitments and negotiate competitive arrangements for members. As at June 2022, based on APRA’s Annual fund-level superannuation statistics, AIL was the 6th largest provider of superannuation in Australia with total super assets of approximately $102 billion and a membership of approximately 850k members.

As at June 2022, FCP had superannuation assets of $2.1 billion and a membership of 20k members. More than 99% of FCP investment options held assets of more than $30m and therefore did not have any imminent last man standing risk.

Operating costs 🗹

As at June 2022, based on APRA’s fund level data, AIIL’s superannuation operating cost ratio were ranked among the lowest in the industry (1^st quartile). AIL’s operating costs have increased over the last few years due to regulatory, remediation, compliance and aging infrastructure costs. However, a number of projects are underway to further automate and streamline our processes, and improve our technology platforms, which are expected to stabilise AIL’s operating costs in the longer term.

Dividend payments that were paid to our former parent company, CBA, were made in accordance with AIL’s Capital and Dividend Policy, which requires that the amount and timing of any dividend is consistent with AIL’s fiduciary duties and members’ best financial interests.

Basis of setting fees 🗹

We confirmed the appropriateness of each category of fee and cost charged to members.

The fees and costs paid by FCP members were assessed as being sufficient to cover the costs of the product and that the manner in which fees and costs are charged to members is appropriate.

Product evaluation

Having regard to the factors set out in this document, we concluded that on balance FCP is promoting the financial interests of members.