THIS SITE IS INTENDED FOR ADVISER USE ONLY

By clicking through to the Investments or Platforms site below you confirm that you are a licensed adviser operating under an Australian Financial Services License.

Colonial First State

Colonial First State

Annual Member Meeting

Annual Member Meeting

 

In March 2022 we held Annual Members’ Meetings (AMM) for our Colonial First State superannuation funds. Members could log in and attend virtually to hear from members of our Board and Executive team, and ask questions.

If you couldn’t make the event, don’t worry. The video recording, minutes and Q&As are all available for both our Colonial First State Investments Limited AMM and Avanteos Investments Limited AMM.

Colonial First State Investments Limited

Please find information relating to the Annual Members’ Meeting held on 10 March 2022, 12pm to 1:30pm.

  • TODD STEVENSON:
    Good afternoon. My name is Todd Stevenson, and I'm the Chief Customer Officer for Colonial First State. I'd like to welcome you to the second Annual Members' Meeting for Colonial First State Investments Ltd.

    In the spirit of reconciliation, I acknowledge the traditional custodians of our country throughout Australia and pay respects to their Elders past, present and emerging.
    Today, we'll hear from our Chair, Greg Cooper, who will provide an overview of the investment program underway within CFS and the benefits that will be delivered for you, our members. Kelly Power, Chief Executive Officer of CFS Superannuation, will then provide an operational update on behalf of the CFS management team.

    And lastly, Scott Tully, General Manager of Investments, will provide an update on market developments and the impact they've had on your investments over the last year. We're also joined today online by Stephanie Smith from PwC as our auditor, the CFS executive team and our trustee directors. Following the presentations, we will open up for your questions, which our speakers and directors will answer.

    Thank you to those members who sent through questions prior to the meeting. It's very pleasing to see the high level of interest expressed through your questions. We'll aim to answer as many of your questions as we can and also make time to answer questions from our members watching our webcast.

    If you'd like to submit a question during the meeting, click on the Join button on the bottom right-hand corner of your screen, then type your name into the pop-up box and hit submit. You are then able to type your question again in the bottom right-hand corner of your screen. I would now like to introduce our Chair, Greg Cooper, to provide his update.

    GREG COOPER:
    Good afternoon. I'm Greg Cooper, the Chair of Colonial First State Investments Limited, and I would like to thank you for joining us today. Today is an opportunity for us to share progress on our vision to be Australia's first choice for retirement and investment savings.

    We have very clear objectives to get there. They include consistently generating strong long-term returns for you, which includes an unwavering focus not only on exceeding the investment objectives, but continually striving to improve your outcomes. Sharing the benefits of our size and scale as one of Australia's largest super providers with you to make sure you receive the best possible benefits at the lowest possible price.

    And continuing to innovate through investing in products and services. Over the last two years, the global pandemic has sharpened Australians' focus on their retirement savings. The enduring lockdowns and closed borders have had a significant impact on people's lives.

    I also want to acknowledge the terrible situation in the Ukraine and the fear and suffering of those affected by war and any of our members who have ties to the region. I'd also like to acknowledge the floods in Queensland and New South Wales. Our thoughts are also with the communities and our members that are directly impacted.

    However, there's positive news in Australia, too. We're seeing greater economic growth and lower unemployment as our borders reopen. The majority of Australians are now fully vaccinated against COVID, and for many of us, we're finally able to return to living a more normal daily life.
    Our board and the CFS team have worked exceptionally hard to navigate through the last two years and the ongoing market volatility to deliver strong returns. It's all part of creating the best retirement outcomes for you, our members, which is at the heart of everything we do at CFS.

    In December, CFS embarked on an exciting new phase as a stand-alone business, following the sale by CBA of a 55% stake in CFS to global investment firm KKR. This benefits members by delivering a range of improvements to products and services, with more than $430 million being invested in the business over the next four years.

    Thanks to the support of our shareholders, KKR and CBA. Improving your service experience, including greater digital investment to make it easier to track your super and investments and complete everyday transactions, providing a bigger range of products and greater choice and access to world-class technology for you and for the financial advisers that work with many of our members.

    Our investment performance for the financial year ending 30 June 2021 was strong, and our General Manager Investment Scott Tully will share more on that with you shortly. This saw our MySuper FirstChoice Lifestage Fund deliver an average return of 22.4% over the 12 months to 30 June 2021.
    Commonwealth Essential Super and FirstChoice Employer Super also topped the recent annual rankings by Rainmaker, coming first and third respectively for performance amongst all MySuper products in financial year 2021.

    Despite the pleasing investment results, we were disappointed that one of our MySuper products, FirstChoice Employer Super, which makes up about 10% of our members, narrowly missed out on passing APRA's first annual performance test under the Your Future, Your Super reforms. We quickly responded to this result, appointing one of the largest fund managers in the world, BlackRock, that has great skills with managing these types of portfolios.

    We're confident that the changes we're making will mean both of CFS's MySuper products exceed the performance test benchmark this year. It's also worth noting our other MySuper option, Commonwealth Essential Super, was not impacted and passed the performance test. Last week, the Australian government advised super funds to divest Russian assets.

    We're working with the investment managers to divest Russian debt and equity investments. We've also prohibited the purchase of any new investments in Russia. Our portfolio exposures in Russia currently comprise less than 0.1% of total funds under administration.

    The divestment will be completed as quickly as conditions permit, noting that some key markets are currently closed. We will also continue to comply with all sanctions imposed on Russia by the Australian government. Another key focus has been playing our part in addressing climate change. Climate change is a front of mind concern for governments, businesses and communities.

    We recognise the role we need to play on environmental, social and governance or ESG issues for our members, as a significant investment manager and employer and helping transition to a low carbon economy. Climate change is one of a number of important and foreseeable environmental and social risks that have the potential to materially change the value of investments.

    We believe in good investment management of ESG risks can enhance the potential long-term performance of companies and in turn, improve returns for members. We announced our climate change policy in October last year, which includes our commitment to transitioning our investment portfolios to net zero emissions by 2050.

    We've also created a climate action plan, which sets out how we will transition our portfolios while continuing to manage our investments to deliver the best outcomes for members. We'll continue to make meaningful progress in the year ahead.

    CFS has continued its focus on reducing fees in the past year. We lowered our administration fee for our FirstChoice Employer Super. And we've also reduced insurance premiums for members of FirstChoice Employer Super, Essential Super, FirstChoice Personal and FirstChoice Wholesale Personal products. FirstChoice Wholesale Super also has some of the lowest administration fees for balances up to 250,000.

    And following the fee reductions for FirstChoice Employer Super, it has one of the lowest fees and costs of any MySuper product, putting it amongst the top group of funds based on our analysis of Chant West data. In all, more than 770,000 of our members have benefited from fee reductions to the tune of more than $220 million per year over the past three years.

    We're committed to further improving our competitiveness, and our investment program will create more capacity to reinvest in growth areas and pass the benefits of our size and scale back to members through lower fees in the future.

    Our leadership team has also been refreshed. We appointed Kelly Power to the role of Chief Executive of CFS's superannuation business and Kelly also joins the trustee board. We also welcomed new additions to the board, including Jo-Anne Bloch, who has extensive experience in super and innovation.

    Jo-Anne was appointed as an independent Non-Executive Director in October. John Brogden also joined as an independent Non-Executive Director. John has a deep understanding of super and financial services and as a patron of Lifeline Australia, is a passionate advocate for mental health and wellbeing.

    As Chair, I want to thank my fellow Non-Executive Board Directors, Penni James and Ben Yeap, for their continued contribution and strong focus on improving outcomes for members. In closing, I want to extend my thanks to the CFS team and financial advisers for their continued commitment and for helping to build a stronger CFS that's very focused on increasing benefits to members.
    Finally, I want to thank you, our members, for the trust you have shown CFS throughout the past year. You can be assured about our commitment to even better service, increasing our benefits and improving your retirement outcomes. Thank you.

    TODD STEVENSON:
    Thank you, Greg. I would now like to introduce Kelly Power to provide an update on behalf of the CFS executive team. Thank you, Kelly.

    KELLY POWER:
    Hello, I'm Kelly Power. I'm the CEO of CFS Superannuation. Welcome to our Commonwealth Essential Super and our FirstChoice members. It's great to have so many of our members joining us today, and I'm really looking forward to updating you on our priorities and answering as many of your questions as we can.

    Our members are always at the forefront of decisions made at CFS and especially during the challenges of the last few years. We manage approximately $150 billion in funds for almost one million Australians. We are proud to be the largest payer of pensions after the federal government and actually managed account-based pensions for more than 166,000 members.

    We're very focused on making progress towards our vision to be Australia's first choice for retirement and investment savings and delivering great results for you, our members. At last year's meeting, there was a lot of interest in hearing more about the sale of 55% of CFS by the Commonwealth Bank to KKR, who are a global investment firm, and how that will deliver better outcomes for you our members.

    On 1 December last year, CFS became a standalone company when the sale of 55% of CFS was completed and we're delighted now to have two very supportive shareholders in KKR and in the Commonwealth Bank of Australia. And with their backing, we're looking to invest $430 million over the next four years to power the growth of your retirement savings and your investments. This investment is being made by our shareholders.

    We have not increased your fees to make this investment and in fact, we've been consistently reducing your fees. I'll take you through an example of that shortly. I know from reading each of the questions submitted ahead of this session, that you're interested in a number of things. Firstly, you're interested in performance.

    Secondly, you're interested in the services that we provide and how we're committing to keeping you informed. And finally, our commitment to climate change and our focus on environmental, social and governance or ESG issues. We'll answer as many of your questions as we can today, and for those whose questions we can't get to today, we'll reply to you following the meeting.

    So firstly, let's have a look at how our funds performed. Super is a long-term investment. And after buying a home, it is the biggest investment that many people will have. By staying true to our focus on delivering strong returns for members over the long run, we're pleased to report solid investment returns in the last financial year.

    Both our MySuper FirstChoice Lifestage funds have outperformed their investment objectives since inception. And as this graph shows, according to data from Chant West, who are an external independent research provider, members in our FirstChoice Employer Super Lifestage option, who are born between 1980 and 1984, which is one of our largest investment options, received returns in excess of 26% for the year up to 30 June.

    And while past performance is no indication of future performance, this result is well above the midpoint for other funds of 17.8%. Importantly, our choice products have also had a very strong year.
    Our FirstChoice growth option on FirstChoice Wholesale Super, which is again one of our larger funds, is invested in by many of our members. It returned 21.3% net of fees and taxes over the 12 months to 30 June and has returned 8.3% per annum over the last 10 years. The fund was also recently ranked in the top group for the performance of growth funds over 10 years by Chant West.
    I also know from listening to your feedback and your questions, that service is really important. The good news is that much of the $430 million that we're investing over the next four years is focused on providing better products and better services for you.

    And this includes upgrading all of our technology systems to deliver market-leading super and investment services. It also includes improving our digital channels to make it easier for you to track and to make changes to your super and to your investments, including using our app. And we already had the most investment options amongst the top five public offer super funds.

    But we continue to expand our range of products and services and investment options to give you more investment choice. We're also going to make it easier for you to stay informed, with better access to member education, support and tools to help you build your super savings and to navigate the complexities of the retirement system.

    During the early stages of the pandemic, many Australians chose to access their super through what was called the government's early super release scheme. And this included thousands of CFS members.

    At the time, I heard some pretty heart-wrenching stories of members needing access to their funds early to pay for essentials such as to pay for food and to pay for rent. We took our obligations to help very seriously. We responded very quickly and we paid out $1.5 billion to almost 142,000 of our members who requested a withdrawal of their super early.

    So since then, we've received a number of questions about how members can start rebuilding their super or making more contributions above what their employer currently pays. Our modelling last year showed that if you access $10,000 from your super early, making small and regular top-ups over time when you can afford them, can make a really big difference when you hit retirement.

    So, for instance, a 30-year-old could see an extra $25,000 at retirement by making an additional contribution of just $20 a fortnight from their pre-tax income through salary sacrifice. Another way you can consider rebuilding your super is by making additional contributions from your pre-tax income by salary sacrificing, and that allows you to make additional contributions up to your unused super cap of $27,500 a year.

    I'd now like to move to share with you some of the improvements we've made at CFS that will benefit you, our members. As I mentioned, we already have a comprehensive investment menu with over 140 options from leading Australian and international investment managers. And we know that providing this wide range of investment choices is very important to our members.

    So we've added more investment options to the menu. We've also heard that you're looking for low-cost options, so we've added a range of index funds for members who want a simple investment option with a reduced price of investing.

    So for instance, comparing our fees for CFS's Australian shares index option, which is 0.34% per annum in total costs, it's well below the midpoint for other similar index funds. We now also have new ESG investing options that take in ethical and sustainability considerations in the way that the portfolios are constructed, such as not investing in companies with exposure to tobacco, to alcohol and to fossil fuels.

    We've seen this year that more members are engaging with their super, this is over the past two years and investing in providing a better digital experience. Since we've launched our member app in April 2020, we've had 152,000 downloads, and we continue to regularly add new functionality to provide more of the features that you've asked for.

    We've also made it easier for you to track your balance and your investments over time through FirstNet Investor, with the ability to go back to previous financial years so that you can more easily understand the impact of your decisions on your balance.

    It will also be a lot easier to communicate with CFS through a new inbox, where you'll be able to see correspondence and statements, helping to stay informed and across all of those updates. Many of our members already work with a financial adviser, and we have a deep respect for that relationship. We believe that quality financial advice will make a material difference to how much money people will have in retirement.

    I was recently told a story about the difference one financial adviser made to their terminally ill client. The assistance that was provided saved that person's estate $100,000 upon their death. I've seen personally with my parents recently retiring, the benefit from the help of the downsizer contribution into super that they received working directly with a financial planner.

    For those of you who do not have an adviser and would like to access financial advice, we've added a find an adviser site to our website, which has already been accessed by over 11,000 members.
    As a part of our commitment to continually improving outcomes, we've made a number of changes to help lower fees for our members. We've worked with our insurer AIA to reduce insurance premiums from the first quarter of 2022 calendar year for almost 220,000 members of FirstChoice Employer, Essential Super and FirstChoice Personal and Wholesale products, will save a combined $40 million a year through lower insurance premiums.

    As this chart shows, our admin fees for FirstChoice Wholesale Personal Super are among the cheapest in the market compared to our competitors. We've also seen some changes in the regulatory environment around super and pensions. At the start of the pandemic, the government reduced the minimum annual pension payment required for account-based pensions and annuities. Members can, of course, choose to receive more.

    Give us a call at any time to receive more than that pension amount. But from 1 July this year, the minimum annual pension will return to normal levels. So, for example, for a member that's aged between 65 and 74, this will return up to the 5%. The government has also introduced a measure called account stapling for super funds.

    So, the aim of this is to reduce the costs associated with having unintended multiple super accounts that can add up as workers move jobs. So, for people, a lot of their first jobs are typically retail or hospitality before they then move on to another job. So, in my case, it was at McDonald's. If I was starting out today, stapling would mean that that first fund that I added at McDonald's would be the one that would follow me from job to job until I make a decision to move elsewhere.

    Another measure which we've advocated for, is a removal of the $450 minimum income threshold to receive super guarantee payments. This is a very important step on improving the retirement savings for lower-income earners and in particular, women, and will go a long way to helping close the gender super gap.

    Concessional contribution caps were also lifted last year. So, they've increased the annual limit on taxable contributions to $27,500. And the superannuation guarantee or SG rate also increased to 10% from 1 July, and is scheduled to continue to increase up to 12% by 2025. We've made more progress this past year for members, and you'll see improvements in the year to come as we continue to invest in our business to benefit you.

    We're proud to be recognised for the work that we're doing to support our members. Money Management declared our FirstChoice Wholesale Personal Super product as the best super performer for 2022. And last week, Canstar named CFS the provider of the year for managed funds, for the fourth year running.

    Before wrapping up, I'd like to echo our chairman's comments about our members who have been affected by the floods in Queensland and here in New South Wales. The situation is devastating and you are very much in our thoughts at this difficult time. On behalf of our CFS team, we want to thank all of our members for your confidence and your trust. And I can assure you that we remain committed to you and to your retirement goals.

    I also want to take this opportunity to thank our advisers who work with our members to help them meet their financial and retirement objectives, for your ongoing support throughout this year. And finally, I'd like to thank you for your commitment and unwavering focus for our team to delivering for our members. Thank you all for your time today.

    TODD STEVENSON:
    Thank you, Kelly. And for our final presentation today, I'm pleased to introduce Scott Tully, General Manager of Investments, to provide his update.

    SCOTT TULLY:
    Good afternoon. My name is Scott Tully and I'm the General Manager of Investments for Colonial First State. Our Chair Greg Cooper and Chief Executive Kelly Power, have shared their insights on the superannuation landscape, our strategy, operations, and member-first approach. Everything we do at CFS is about helping our members achieve financial freedom in retirement.

    Throughout periods of market volatility and geopolitical uncertainty, our focus remains the same. To generate great returns over the long-term for our members. As you know, the past year has been incredibly challenging for Australians, as we continue to deal with the pandemic. The government stepped in to help businesses and secure jobs.

    And this critical support allowed our economy to keep moving. Meanwhile, the Reserve Bank played a key role by keeping interest rates at a record low. These actions were very positive for investments over the year. The rollout of the Covid vaccine was a major theme in 2021. Vaccinations became available in late 2020, and by the end of 2021, most developed countries had achieved a vaccination level of 70% or higher.

    This is a great achievement, and one of the most important reasons for the strength of the global economic recovery in 2021, as people are able to get out and spend again. It was against this backdrop that CFS members benefited from exceptional performance in financial markets. Despite the challenges of the pandemic and the unwinding of government support, 2021 was a great year to be invested.

    Equities saw exceptional returns powered by low rates and strong earnings growth. Share markets in the US, UK, Europe, and Australia did much better than emerging markets. Partly, due to lower economic growth in China. Many of you would have seen reports of higher inflation. This has sparked much speculation about when interest rates will rise.

    While these issues generated plenty of headlines towards the end of last year, they failed to slow investment performance. And I'm pleased to say that most CFS members enjoyed significant growth for the year. Global shares in developed markets were the top performing asset class, delivering a return of 29% over the year.

    In Australia, the share market delivered a lower, but still very substantial return of 18%. It gives me great pleasure to announce that CFS delivered some great returns to members in 2021. Many of you will be invested in our FirstChoice growth option, one of the largest funds we manage. This fund returned over 21% for the 12 months to 30 June.

    As you know, superannuation is a long-term investment. With that in mind, we wanted to highlight that this fund has returned more than 8% per annum, over 10 years. The FirstChoice Growth Fund was also recently ranked in the top group for the performance of all growth funds over 10 years by research house Chant West.

    We're also pleased to report that our FirstChoice Lifestage funds delivered an average return of 22% over the year to 30 June, 2021. Since its launch more than eight years ago, FirstChoice Lifestage members have received returns, net of fees and taxes, up to 8.8% per annum. With an average in excess of 8% per annum to 30 June, 2021.

    Despite achieving solid performance and having very competitive fees, our FirstChoice Employer Super fund, narrowly missed APRAs Your Future, Your Super performance test benchmark last year. It is worth noting that this performance test result only applied to the MySuper product, FirstChoice Lifestage investment options, and not any of the other Colonial First State products or investment options.

    This benchmark does not measure absolute performance and is quite technical in nature. We often say that past performance is no guarantee of future results. Which is important to consider as the APRA performance test applies to investment performance over the past seven years.

    While it is disappointing that the fund narrowly missed APRAs performance test, we are pleased that it has delivered returns for members that exceed the investment objectives, that were established when the fund was set up in 2013.

    At CFS, we're always looking for new ways to improve investment performance for our members. As part of this member-focused approach, we have partnered with BlackRock to enhance the investment management of FirstChoice Employer Super, and Commonwealth Essential Super which are held by more than 10% of members.

    BlackRock is one of the largest asset managers in the world. And with their scale, portfolio management capability and access to global investment skills, they will assist Colonial First State achieve our goals for our customers who have their super and our MySuper products. As you can see, asset prices have been able to increase during a period of low inflation and low interest rates.
    But expectations for higher inflation, the unwinding of government support and rate rises, have started to impact markets in 2022. We believe higher inflation is here to stay, and we'll be watching to see what central banks do. Global and domestic shares fell at the start of this year, and we expect volatility will continue.

    To higher interest rates and the ongoing nature of the pandemic, we can add the uncertainty that comes from an unstable geopolitical world. The Russian war in Ukraine has led to significant market volatility. Last week, the Australian government advised super funds to sell down their Russian assets. We are working with investment managers to work through the process of selling Russian debt and equity investments.

    This process will be completed as quickly as conditions permit, noting that some key markets are currently closed. We will continue to comply with all sanctions imposed on Russia by the Australian government. When it comes to investing, we know that having a long-term outlook means looking beyond short periods of volatility.

    Depending on how your super is invested, that might mean you see fluctuations in your super balance during periods of market volatility. In Australia, the Reserve Bank is forecasting economic growth in 2022 well above the long-term trend rate, and the economy looks on track to grow by almost 4% this year.

    Unemployment is currently at 4.2%, and it is expected to touch lower levels that haven't been seen since the early 1970s. Ultimately, it is important to remember that super is not a set and forget investment. It can be helpful to check in with your super and review your investment strategy to ensure it aligns with your goals, financial needs, and investment time horizon.

    Speaking to a financial adviser can help. In closing, I'd like to thank you, our members, for investing with us and for staying the course. We look forward to continuing to deliver for you in the years ahead and in building a future that you can enjoy in retirement.

    TODD STEVENSON:
    Thank you, Scott. We now have Greg, Kelly, Scott, an independent Non-Executive Director, Jo-Anne Bloch here to answer your questions. I do want to thank those members that sent through questions prior to the meeting. If you'd like to submit a question during the meeting, please click on the Join button on the bottom right-hand corner of your screen.

    Then type your name into the pop-up box and hit, submit. You will then be able to type your question again in the bottom right-hand corner of your screen. Please note that if your question is of a personal nature, we will not be able to answer it today due to privacy reasons. However, we will aim to respond to your question and all questions directly.

    Now, if we don't have time to answer your question today, we will also be publishing responses to questions on our website, following the annual member meeting. We'll now go to our Q&A.
    And the first question that we've received today is from John in New South Wales. It's a two part question and I might direct it to you, Greg. John has asked, "With KKR being the majority shareholder of CFS, what will the focus of CFS be now? And does KKR plan on splitting CFS in the future, and therefore, should I take MySuper elsewhere?" Greg.

    GREG COOPER:
    Thanks, Todd, and thanks, John, for your question. So, maybe I'll just address the second part of that. First, KKR is a financial investor, not a strategic buyer or an owner operator. They back management teams to run the business. So, CFS is a standalone business with a great management team and an independent board, and that will remain the case.

    As I mentioned in my opening speech, CFS is now operating as that standalone business managed by the trustee, with that majority independent board committed to delivering best outcome for members.
    Our focus is going to be on, firstly, delivering a range of improvements to products and services, with more than $430 million being invested in the business over the next four years, thanks to the support of our shareholders, KKR and CBA.

    Improving the service experience, including greater digital investment to make it easier to track your super and investments and complete everyday transactions, and providing a bigger range of products and greater choice for you, our members, to access world class technology for you and the financial advisers that work with many of our members.

    TODD STEVENSON:
    Thank you, Greg. Now the next question comes to us from Carl, who's based in Queensland. I might direct this to you, Scott. Carl asks, "Can you please update on the performance of the fund that APRA has deemed in the bottom performers for 2021?" Scott.

    SCOTT TULLY:
    Yes, it's a good question from Carl, and we've had similar questions from a number of our members. So, just a little bit of background on this for those who are watching, APRA has introduced a thing called the Your Future, Your Super performance test. And what it seeks to do is measure performance relative to a benchmark that's been prescribed by APRA. For us, it applies, for all super funds it applies to their MySuper funds.

    But for CFS that applies to only 10% of the total money that we manage on behalf of our members. So, 90% of the total was not impacted by performance test. Having said that, we were disappointed that we failed the performance test in 2021. So, the question is what are we going to do about it? Well, probably the most significant thing is we appointed BlackRock to be a partner with CFS, to draw on their extensive experience.

    BlackRock, as I've said before, is one of the largest fund managers in the world, and they have great capabilities which they're bringing to assist CFS. Very important to also note that our Lifestage funds, our MySuper funds, have outperformed their investment objectives since inception. So, they've delivered very solid returns to members.

    As I said, the performance test is a measure against a benchmark. It doesn't measure the total return that members have received. And we only narrowly missed that threshold. As an example in the 12 months to 30 June, 2021, we delivered an average return to our Lifestage members in FirstChoice Employer Super of 22.4%, over the full 12 months.

    So, the returns to members have been strong. They just weren't up to that level. Also important to note, there's a range of things that Kelly talked about in terms of reducing our fees and the like, and they're all improvements we've made to assist members and to put us in a great position to pass the performance test in 2022. Todd.

    TODD STEVENSON:
    Thank you, Scott. There's a question here for Kelly, and it comes from Joan in Queensland. Joan asks, "How do Colonial First State's returns compare with other similar funds. Is there a rating? And if so, what is CFS's rating?" Kelly.

    KELLY POWER:
    Yeah. Look, CFS in our FirstChoice suite offers 140 investment options, over 140 investment options. And that covers a wide range of asset managers, different investment strategies, different sectors, and different risk profiles. So, something that's really important to us is to give our members broad choice, so that you can pick the investment options that suit you, working with your financial adviser in many cases.

    What I would say in relation to a couple of examples in terms of returns, are more recently, so, as Scott mentioned, for our Lifestage funds for the year to 30 June, 2021, for one of our largest cohorts or our largest investment options, our fund returned 26%. And that compares to an average across the industry of 17.6%. So, that is a significant outperformance to the industry average and something that we're very proud of.

    If you look at our FirstChoice Growth Fund, which is one of our choice options that members can select from, so, one of those 140 investment options, that fund return to 30 June, 2021, 21.3%. So again, very strong performance. And if you go back over the 10 years, 8% on average year-on-year, and is ranked in one of the top funds in the country.

    So, I think, all of those things show that we are performing well when compared to other similar funds that are available. But one of the things I would suggest is that members go and have a look on our website. You can find all of the different investment options that are available and different ones to suit different needs.

    TODD STEVENSON:
    Thank you, Kelly. The next question I might direct to you as well again, Kelly. This time it comes from Adam, here in New South Wales. And Adam asks, "Can you tell me how CFS's fees compare to other funds? Can you please provide some benchmarks?" Kelly.

    KELLY POWER:
    Look, one of the things that we've been really focused on over the past few years is ensuring that our fees are very competitive in the market and consistently reducing our fees. So, a couple of examples of that $40 million per annum in premium reductions for insurance related premiums for our members.
    So, that's a year-on-year saving. And $220 million in administration fee savings for our members. If you look at our FirstChoice Wholesale Personal Super option, and I had a chart earlier that was in my update, our administration fee for an account balance of $50,000 was basically one of the lowest in the market. So, 0.2% per annum.

    A very competitive fee. And again, we've just, that commitment to ensuring that our fees remain low for our members. We also offer what is called an index fund range as well. So, if members are looking for a very low cost index option, there are ones available within our FirstChoice Wholesale product also.

    And they, for the Australian share option is 0.34%, for administration and investment fees, and that as well is well below the median of fees across the market.

    TODD STEVENSON:
    Thank you Kelly, and I would encourage all of our members to visit our web sites on a regular basis where we do provide information regarding the fees and the performance of our funds. The next question comes to us from Astrid, in Victoria.
    And I'll direct this one to you, Scott. Astrid asks, "Are there any particular industries or target sectors that Colonial's looking to invest in, to continue to maintain the return for members in this uncertain environment?" Scott.

    SCOTT TULLY:
    Yes. Another great question. And thank you Astrid for the question. Look, investment is all about managing uncertainty. We've seen the last couple of weeks quite extreme or quite high volatility as a consequence of the Russian war, and that has dislocated investment markets. And there are factors coming in now that really weren't present three or four weeks ago.

    So, that uncertainty is something that you manage typically by being very well diversified. You want to have exposure in your investment portfolios to a range of investment sectors and individual investments. Because ultimately, you're trying to deal with uncertainty and you don't want to be exposed to one particular event.

    You don't want to have all your eggs in one basket. So, diversification is the important thing. That doesn't mean there's not specific opportunities, but those opportunities will change over time as investment markets evolve. And if you're taking a long-term perspective, some of that is noise, and some of that is more material.

    So diversification is the key thing to do. It's not about chasing a particular strategy at any one point. Having said that, Kelly talked about the 140 investment options, so members can absolutely choose investment options that suit their perspective. We've added some great new ESG focused investment options on the menu, so for members who are interested in that.

    But it's all about choice. And then within choice, making sure you have a diversified portfolio, so that you can respond to that and manage through that uncertain environment.

    TODD STEVENSON:
    Thank you, Scott. The next question comes to us from Julia, in South Australia. And I'll direct this to you, Greg. Julia asks. I've seen that a manager in charge of one of our invested funds recently left due to personal issues. Should we, as members, be informed about these kinds of events, as this can affect the performance of our funds?"

    GREG COOPER:
    Yeah, thanks Todd, and thanks Julia. Look, as a trustee, we take our responsibility to oversee members' investments very seriously.

    And to that end, we have a board investment committee that focuses purely on all of the various investment options that we have on the menu and how those options are performing and any changes that might take place within those particular options.

    We also recognise that, in almost all cases, the investment options that we have are not reliant on any one individual. We're looking at a broader investment capability because, from time to time, there are always gonna be changes within some of the fund managers who we appoint.

    So that role of monitoring those falls back to the board investment committee, and they are constantly, as I said, looking to monitor those capabilities of the fund managers. And where there is an issue we feel with a particular fund manager's capability, be that because an individual has left or the broader capability has changed, then we'd look to make some changes to that over time.

    TODD STEVENSON:
    Thank you, Greg. The next question I'll direct to Kelly, and it comes from Tracey, and I personally really like this question because it's about what we're here to do for our members over the long term. Kelly, Tracey asked us, "You spoke about employer super in your presentation. What about retirees relying on their super over the longer term with Colonial First State?" Kelly.

    KELLY POWER:
    Yeah, thanks, Tracey. And, look, we are very focused on retirees. As I mentioned earlier, we are the largest pension payer outside of the Australian Government. We have 166,000 retirees who have entrusted us with their retirement savings and are drawing a pension from our products. So we want to ensure that we provide all of the best services for our retirees, all the best investment options. All of the investment options I talked about earlier are available in the pension suite as well, so 140 investment options available, and that includes a broad mix of investments, including those income-producing assets and less risky assets that are sometimes more suitable depending on your age or depending on your risk appetite.

    As well, the fee changes that I mentioned earlier, we ensure that they also apply to our retirees. So, keeping our fees as some of the most competitive in the market, and ensuring that we provide a broad range of services, so committing to making sure we pay your pensions on time, providing a great level of service, telephone support. So, we're really committed to all of our retirees and to ensuring that we support all of those 166,000 members.

    TODD STEVENSON:
    Thank you, Kelly. Now, the next question comes to us from Jessica in Victoria. And this question is probably one of the most commonly asked questions that we receive of late. So I'm really glad you've asked it, Jessica. And I'll direct it to you, Joanne. Jessica asked, "What is CFS and the fund I have doing about getting to net zero emissions by 2050 and is there an interim target in line with the international recommendations?" Joanne.

    JOANNE:
    Thank you, and it's not surprising to see this. And as you said, Todd, so many questions on this topic, and Scott has outlined the context of global uncertainty. And of course, recent weather events make this very, very much an issue that we need to deal with. It's live, and it's real. CFS has committed to transitioning our investment portfolios to net-zero greenhouse gas emissions by 2050, and this target aligns CFS to the Paris Agreement goal to limit global warming to well below 2 degrees by 2100.
    To reach the 2050 target, CFS has created a climate action plan which sets out how the business will make this transition in its portfolios while it continues to manage investments to deliver the best outcomes for members. CFS has committed to a 30% reduction in greenhouse gas emissions from the 2019 levels for the CFS investment portfolios. And those commitments are available for review on our website if you'd like to have a look at that.

    Like you, we take these issues very seriously, and we are continually reviewing and evolving our strategies and our policies to address ESG and climate change. And Scott mentioned earlier, we have added ESG options to our menu to reflect what our members and our customers are looking for, but also because we're keen to make sure we have the options available. Thank you.

    TODD STEVENSON:
    Thank you, Joanne. The next question comes to us from Allan in Victoria, and I'll direct this to our chair Greg. Allan asked, "Please explain the background of the penalty of $20 million that Colonial was ordered to pay in October of 2021. Does the penalty affect the returns on members' funds?" Greg.

    GREG COOPER:
    Well, thanks, Allan. The first thing I'd like to say is that we've apologised unreservedly to members impacted by those historical issues, and we've taken action to fix past breaches including by compensating any affected members with interest. Unlike other super funds that have recently started charging members fees to fund penalties by the regulator, this penalty was funded by shareholders, not by members.

    More broadly, over the last three years, we've put every effort into improving the quality and management oversight, implementing regulatory reforms and making important improvements to our business. As a stand-alone business, and as we've talked about earlier, we are making significant investments to be a better business with members' interests at the heart of everything we do.

    TODD STEVENSON:
    Thank you, Greg. Now, the next question comes to us online from Harumi, and I'll direct this to Scott. The question reads, "What do I do in this financial downturn for my allocated pension, as the account balance that I have has dropped about $40,000 at the moment?" Scott.

    SCOTT TULLY:
    Yes. And I imagine that there'll be many of our members who are looking at their balance and seeing that it is lower than where it was. I can't talk about Harumi's situation personally because I don't know the details, but I would imagine that many people with allocated pensions have got it structured in a way such that there's some money that's there invested in risky assets, volatile assets, and some money that's in more conservative assets. So I'd, first of all, just check how your money is allocated.
    Second of all is that if you have some money in risky assets, there is market volatility for those portfolios. So the whole point of being invested in risky assets is because, the long term, you expect high returns, so that's a key thing. But the change in balance is reflective of markets. So if a person was to switch their investments to something more conservative, then you are effectively locking in those that change in your balance. So you could be very careful about responding to short term markets.

    And if you look at the overnight markets even, the US market was up. So you can see it was down, it was up. This happens from time to time. Keep that long-term perspective. Make sure that you're diversified, but also look at where is your money invested. Make sure that you have got the right portfolio to meet your personal risk appetite, but keep long-term in mind if that is your time horizon indeed. That all is the sorts of things that a financial adviser would be talking to you about.
    So if I go back to Harumi personally, if you have a financial adviser, they can help or if you don't, go to our website. We have a 'find a advisor' tool there that can refer you to an advisor not linked with CFS but they're available there for you to choose if you need some advice.

    TODD STEVENSON:
    Thank you, Scott. And Scott, while we've got the floor or perhaps the table, another question of a similar vein from Gillian in Tasmania. And she's asked, "Which industries in 2022 will dominate the market for those who are retired and depend on the income?"

    SCOTT TULLY:
    So obviously, if you're a retiree, as Gillian I'm assuming is, you're living off your income, your investments, I should say, you want some income in there to live on. So the question for me is about, what direct investments a person might have, what dividends do they pay? So, dividends are something that companies provide out of their profits. Profits can be volatile over time. But if we looked at recent experience, the big banks, the resource companies have announced very strong dividends.

    BHP has announced strong dividends. Commonwealth Bank and the like have also done so. So that could be of benefit to retirees that those dividends that get paid to them, they can then use to live on. So it's an important question. But keep in mind, of course, that dividends, are at the discretion of the companies, as long as they're profitable, those sorts companies will probably continue to pay those dividends. But they're not guaranteed. But that's the sort of thing I think that Gillian would be looking at.

    TODD STEVENSON:
    Thank you, Scott. The next question comes to us from Victoria, from Hyshun. And I might direct this to you, Kelly. Again, it's a two-part question. So the first part reads, "Do you have an international share fund available for super funds which we can invest in?" And Part B is, "International shares, especially US technology companies, have performed strongly as compared to their Australian counterparts. Do you plan to increase funds..." Sorry, "Do you plan to increase fund investments in major international technology shares?" Kelly.

    KELLY POWER:
    Yeah, thanks for the question. We offer 140 investment options. There's a fairly broad range. I would suggest going to our Find a Fund page on our website to have a look at the range of investment options. That includes...that range of investments do include those that invest in global shares. There is a fund that, specifically, is targeted at the technology sector. There's another that specifically invests in healthcare.

    I think there's about 30 options broadly that do invest directly into international shares. Within First Choice Wholesale, there's also another 20 or so options that invest in specific aspects of international or specific areas with international sectors, such as Asian shares, global resources, global property. There's also infrastructure options. So I would suggest, in the first instance, go to that Find a Fund page and have a look at the broad range of investment options. But there are... And one of the things that we're very committed to at CFS is offering that range of choice for our members.

    TODD STEVENSON:
    Thank you, Kelly. Now, an online question that's come in from Marie that I might take myself is, "Can this meeting be watched at a later date?" Marie, and everyone online, yes, absolutely, a recording of the meeting will be available on our website in the coming weeks. That will also be supported by the Q&A that you've heard here today. And I'd also encourage that while you're there, you can also look at our other educational content and videos. And we'll send out an email advising you when that link is available.

    Now, I might move on to the next question that comes in from Colin in South Australia, and I'll share this or I'll ask Scott to respond to this. "With interest rates inevitably rising, where would you be looking to capitalise or negate that subsequent rise?”

    SCOTT TULLY:
    So there has been a lot of commentary recently about the likelihood that central banks will increase interest rates over the next year. Some of that's diminished a little bit in recent weeks. But I think, generally, the expectation is that the Reserve Bank of Australia, for example, will increase their interest rates this year. So the question is, "Well, how do you deal with that?"
    Well, one thing to bear in mind is that investment markets typically take into account future news in where they're priced today. So, markets are aware that there's an expectation of higher rates, and they've almost responded already. So that has to be considered. And the other thing is that interest rate rises aren't guaranteed. It is dependent on the markets at the time. So having said all that, the question is, "Where do you invest?" And this really comes down to time frame.

    So if Colin has a short time horizon, then, you know, it's a different outcome to a longer time horizon. If you're investing in a short period of time, then you probably don't want to be investing in things that are more volatile, and indeed putting money into a cash investment, you'll see that if and when rates rise, that the return on those cash investments will go up. If it's a longer term thing, then being diversified, as we've talked about before, being diversified is really important. You want to invest across a range of sectors because that will mitigate any impact that hasn't already been factored in by the markets and anything else that comes unexpectantly. You, again, spread your risk.

    TODD STEVENSON:
    Thank you, Scott. Now, as always, a lot of questions relating to performance and market. So another one for you, Scott. This time, it comes from Robert in Queensland. And Robert asked, "What is the outlook as we come out of the pandemic and look at some of the instability in global markets?" Scott.

    SCOTT TULLY:
    So I talked about before, the rates are likely expected to rise. And one of the reasons for that is because, as we come out of the pandemic, central banks will start to unwind those interest rate reductions that they put in place through the last couple of years. And also, governments will start to unwind the stimulus that they've been providing. So, what does that mean? The expectation of higher interest rates. And there has been some impact on markets, as I said in my previous comments. Equity markets have sold off a little bit. So we've seen some of that experience already.

    Geopolitical issues, instability in international markets, again, we're seeing that come through. So, there are all sorts of things to be considered in your portfolio. To reiterate, diversification is generally your friend in this situation. But having said that, CFS, my team, the investments team, will continue to work with the investment managers that we appoint. We're looking to identify the risks and the opportunities investing, and we're going to consider that and position those portfolios so that we manage the volatility and ensure that the outcomes for members are within those parameters.

    TODD STEVENSON:
    Thank you, Scott. The next question I'll direct to Greg, and it comes from Thomas in South Australia. And Thomas asked, "Why is the Essential Super no longer a product that the Commonwealth Bank offers to new customers?"

    GREG COOPER:
    Yeah, thanks, Thomas. So Essential Super was closed to new members temporarily for a range of different regions. We are continuing to support our members and run that fund exactly as we would have, whether the fund was open or temporarily closed. And we continue to run that fund, as always, in the best interests of the current members of that fund. We are, though, working with CBA at the moment and looking at reopening Essential Super to new members by the end of this calendar year.

    TODD STEVENSON:
    Thank you, Greg. A question here from Bernardida in Victoria, and I'll direct this to Kelly. Bernardida asks, "When can I get all of my super money tax-free?" Kelly.

    KELLY POWER:
    Thanks for the question, and unfortunately it's not a very simple answer. Superannuation can be quite complicated. And particularly as you move towards retirement, it is difficult to navigate when you can access your super and what some of the tax rules are. So broadly, we recommend that you see a financial advisor because they can help navigate your particular situation. That said, generally, in order to access your super, you need to satisfy what's called a condition of release. And so that can mean you need to be retired and over 60, so that's broadly the rules.

    TODD STEVENSON:
    Thank you, Kelly. Now, Rob asked, "You've spoken extensively about ESG issues. However, it is difficult to understand what investments are actually held in my super due to the extensive use of investments in managed investment schemes that don't disclose their holdings within the financial reports available to members. What are you doing to improve the visibility of the underlying investments for members?" Scott.

    SCOTT TULLY:
    Yeah. Look, transparency is really important. One of the recent government initiatives, and something that we've definitely been ahead of others, is to provide full transparency on the holdings of all the investment options, on our First Choice investment options. So if you go to the portfolio holdings disclosure on the CFS website, you can go in there and key in the fund that you're invested in, and it will show you every single holding of that fund.

    Now, at the moment, that's showing at 30 June last year. It's about to be updated to 31 December, and we will continue to provide that transparency so that Robin and other members can absolutely see what it is that they're invested in, and they can understand the nature of the investments.

    TODD STEVENSON:

    Thank you, Scott. The next question comes to us from Carol, and I'll direct this to you, Kelly. Carol asks, "Why is CFS still paying only half the gazetted yearly return from my allocated pension, that being 2.5% per annum rather than the 5% per annum?" Kelly.

    KELLY POWER:
    Thanks, Todd. And apologies for my cough. I've just all of a sudden started coughing, for anyone that didn't think that this was live and natural. (LAUGHTER) So this disproves that. So in terms of the minimum pension rules, one of the things... I do get actually asked this question quite a bit, and one of the things I would say upfront was that the reduction in the minimum pension rules, when it went from 5% to 2.5%, had nothing to do with returns. It had nothing to do with activities that CFS specifically made. It was a government initiative that happened during the Covid period to automatically reduce the amount that retirees needed to take out of their allocated pension. So, if you were on that minimum amount and you were on that 5%, you would automatically get reduced to the 2.5%.

    Now, that said, you can ring us, you can contact us at any time, and we will increase the pension amount to whatever amount you are sort of looking at, obviously subject to the relevant limits. From 1 July this year, the government has reintroduced that 5% minimum. So that means your 2.5% will automatically go back up to that 5%. Yeah, so I just wanted to make that point really clear. It isn't related to returns. It isn't related to CFS activities. It's a broader government measure.

    GREG COOPER:
    And it might be worth adding, actually, Kelly that, Carol, and for our other members, to the extent that return, particularly in the last 12 months, where it has been greater than those sorts of numbers, where the return is greater than that, then your account balance would actually just increase. So if you're withdrawing less than the return, then your account balance is going to increase by that difference.

    TODD STEVENSON:
    Thank you both. The next question is from Mary in New South Wales, and I might direct this to you, Jo-Anne. Mary asked, “I am 56 years old and I'm currently employed full time. If I wanted to retire between the ages of 58 and 60, what's the best super plan for me? Do I need to change my current plan?” Jo-Anne.

    JO-ANNE BLOCH:
    Thank you. And Mary, it's a good question and retirement is a big issue, it's a big life stage change and it's something that you want to plan for and think through and take all your circumstances into consideration. So I would probably say if you can get some good financial advice, that would be a great start because they can set out what your personal situation is and then what the right super fund might be for you. The question also depends on your age and stage. Kelly mentioned earlier that there are conditions around retirement. It is preferable to be over the age of 60 to be fully retired, but then some people want to work a bit longer. And so it does really depend. You may want to take a lump sum or a pension and so on. The good news is that CFS has products in both the accumulation phase and products that you can look at in terms of your retirement phase. So I would check those out and I would certainly speak to an advisor around what your options are, relevant to your personal circumstances.

    TODD STEVENSON:
    Thank you, Jo-Anne. The next question comes to us online and is from John, I'll direct this to you, Scott. The question reads, “Your low risk investments invest heavily in bonds, but the bonds market is not good. What alternatives do you offer so low risk funds deliver a good return?” Scott.

    SCOTT TULLY:
    Yeah, look, this is something that's been raised many times over the last year as long term interest rates have reached a level where they're very low. They have come back up a little bit in the last, sort of, six to 12 months, but they're still quite low. So the question is, what return do you expect out of your bonds going forward? Now, the question was also about low risk funds. So what's a low risk fund? It's typically an option that is held by people and members who have a shorter investment horizon. So, you know you're investing for one or two years. You don't want to have your balances go up and down. You wanna have some certainty around the returns at the end of that period, or it's held by people with a more conservative risk profile, so people who, quite rightly, don't want the volatility in their returns. So the question then is, how do you marry that lower level of volatility with the return profile? Now one thing to be clear about is that because it is lower volatility and low risk, that sort of fund is also typically going to deliver a return that's lower than something if you invest in the share market over the long term. So we provide a range of portfolios for members to invest in with a different range of risk profiles, from low to high risk. Having said that, what do you do? How do you manage a portfolio like that? Diversification, again, is the key thing. So you will find that the low-risk portfolios that we manage will include exposure to the share markets. They'll invest in credit, so effectively... debt issued to companies and governments, as well as your more traditional bonds with long term investment horizons. So being diversified across that, across those investments aims to mitigate the return from any one component while ensuring the total outcome is that lower volatility. Sounds a little bit complicated, I agree. But, you know, if you go to FirstNet investor, you can look at the website, you get a better sense of what the portfolios are invested in. But probably the key thing is, it's about looking for opportunities in a range of asset classes to deliver the outcomes that we're trying to achieve for our members.

    TODD STEVENSON:
    Thank you, Scott. Now it's been a great range of really diverse questions received this year, and another one that takes quite a different angle comes to us from Georgy in Queensland. I'll direct this to you, Kelly. Georgy asks, “Is it possible to get part of my super out for a deposit on my house? If it is possible, how much can I access and what's the process to get the money out?” Kelly.

    KELLY POWER:
    Yeah, so as I mentioned earlier, Georgy, there are what is called conditions of release that apply to superannuation, and so the premise of super is that broadly it's preserved or kind of locked away until you hit those conditions of release. And so that's the age of 60 and typically meaning that you're not working anymore. So you would have to meet those conditions of release in order to get the money out to be able to pay for the deposit on the house. Now that said, there was a time over the last couple of years where the government did open up what was called the early release scheme and allow members to access some of their superannuation and that was in response to the pandemic at the time. You know, paying for things like rent, food and things like that. So that's no longer in place. So typically it's now locked away. There is something that's called the first home super saver scheme and that was introduced in 2017. And that scheme means that you can put aside voluntary contributions. So put aside some of your excess contributions above what your employer pays, and you can get those out later on to pay for a deposit for a house and within that period, they're tax concessionly. But that does mean you need to contribute that additional money into your super in order to take it out later on.

    TODD STEVENSON:
    Thank you, Kelly. Another one here for Scott and this time it comes from Andrew in Queensland. Again, quite a topical question that we receive a lot. Andrew asks, “Is CFS looking to add in cryptocurrency or crypto type assets to their investment options in the near future?”

    SCOTT TULLY:
    Yes, so just for people listening, you know, let's decipher what cryptocurrency is. It's things like Bitcoin, NFTs, a whole bunch of investments which only a few years ago weren't really being considered. And it is a very rapidly evolving space and so we have looked at it and we are considering it. But as a trustee of your assets and your superannuation, it's really important that we are comfortable that your investments are safe and sound. And I mean by that, that there are the appropriate controls for the safekeeping of the things that we invest in. And at this stage in answer to Andrew's question, Todd, is that we don't think crypto assets quite have the safekeeping that we need and that's appropriate for superannuation. So, we're always looking at potential new investment options. Crypto is potentially one of them and we will continue to monitor this in the future and maybe one day it will be included in the portfolios, at this stage, no.

    TODD STEVENSON:
    Thank you, Scott. Now the next question comes to us from Brian and I'll directed to Kelly. The question is “On the 1st of July 2022, will the pension payments increase to 5% automatically?”

    KELLY POWER:
    So the simple answer, Brian, is that yes, unless there's any change made between now and that date by the government, they will automatically increase and we'll write to you in June this year and we'll let you know what your new minimum pension amount is that will apply from 1 July. And of course, as I mentioned earlier, you can increase that amount at any time. So there's no maximum payment amount. But yes, that minimum will go back up to the 5%.

    TODD STEVENSON:
    Thank you, Kelly. Another question that's really, really topical at the moment, and I know it's on a lot of people's minds, and I might direct this to you, Greg is, “What are you doing about your investments in Russian assets?”

    GREG COOPER:
    Yeah, thanks Todd. And it is a really topical question at the moment. As, I think, both Scott and I talked about in our opening addresses, last week the Australian Government advised Superfunds to divest their Russian assets. And so we're working with our investment managers to divest any Russian debt or equity investments that we may have. We've also prohibited the purchases of any new investments in Russia. It's worth bearing in mind, though our portfolio exposures in Russia currently comprise less than 0.1% of total funds under administration. The divestment that we're embarking on will be completed as quickly as conditions permit. But I'd note that at the moment, some of those key markets are currently closed. We're also gonna do this in an orderly way to ensure that it's in the best interests of our members.

    TODD STEVENSON:
    Thank you, Greg, and I'll direct this next one back to you, Greg, if I may. And it's a follow on from an earlier question. So great to see Bruce submitting a live question here. Bruce asks, “Can the chair please expand and detail how the shareholders and not the members paid the $20 million fine that you referred to earlier?”

    GREG COOPER:
    Yeah, thanks Todd and thanks, Bruce. I mean, it is a really good question, particularly when, you know, many other funds in the marketplace are raising fees on member accounts to pay for any regulatory or other fines that they may incur. So the penalty in this case was funded by Colonial First State Investment Ltd. It was not paid from members’ accounts, so we did not reduce members accounts. We didn't increase fees. In fact, as you will know, and as we've talked about already, in most cases, we've been reducing fees to members. So as a super fund that's owned by KKR and CBA, we have shareholder funds and those shareholder funds are used to fund future investment. But also in this case, where there was a regulatory fine that was paid for by the shareholder. So just to be completely clear, it did not come from members accounts. It was the shareholders who paid that money.

    TODD STEVENSON:
    Thank you, Greg, and thank you for that clarity and the question, Bruce. The next question, I'll direct to you, Jo-Anne, and comes from Serena in New South Wales, who's both a super member and an investments member. So she holds two accounts with Colonial First State. Serena asks, “Is it better to salary sacrifice extra super payments rather than putting that money into the investment account?” Jo-Anne.

    JO-ANNE BLOCH:
    Thanks Serena, and salary sacrifice is a great way to enhance your ultimate retirement savings, and it's very tax effective. But as everything was super, it comes with some conditions and it is really important to understand those as you're making a decision. You would expect me to say that the best way to get through this is to seek professional financial advice or to look on the website for information around these sorts of things. So just really quickly, salary sacrifice contributions allow you to put more money into super. But as you heard earlier, super is preserved, which means you can't really access that until retirement. So if you're saving money and you need it before you retire, your investment account is a really good option, and being able to save through your investments is a great way to accumulate wealth. And fortunately, of course, CSF can do both. We can provide you with really good options to enhance your salary sacrifice contributions, and we provide really good options around investments. The allocation to each is something applicable to you and your situation, so that's something you need to look at, and advice is always a good way to work it out.

    TODD STEVENSON:
    Thank you, Jo-Anne. I might use that as an opportunity to promote the app as well. If you are looking to stay on top of your super or also monitor your investments, you can see them both side by side on the CSF account. There you can also track your contributions, so you can see when they're actually coming into your account on a regular basis. So I really encourage you to download the app from an app store if you've not already got that. The next question comes to us from Istavan in Victoria, and I'll direct this to you, Kelly. “What are you doing to improve Colonial's standing and competitiveness in the superannuation market?”

    KELLY POWER:
    Yeah, thanks, Todd. And look, as you mentioned, Todd, a moment ago on one of the things that we're really committed to doing is to continuing to invest, to keep you updated, providing you education, providing you information and ensuring that the experience, the way you experience CFS, is also enhanced and improved. And that includes both via our app, via our website, when you call us and just generally across all of our systems. One of the things that we're really proud of is the Money Management Award, that I mentioned earlier, where we were declared for FirstChoice Super is the best super performer for 2022, and we've delivered some great returns for members in 2021. As I mentioned earlier, we're really focused on ensuring our fees remain competitive and in FirstChoice Wholesale, our administration fees is one of the most competitive in the market. So in terms of performance, fees, the services we provide and the choice of investments, we're very committed to continuing to invest, continuing to enhance with the support of our shareholders, we talked a bit about that today, to make sure that we are the first choice or the top superannuation fund in the market for our members.

    TODD STEVENSON:
    Thank you, Kelly. Now an online question that we've received from Peter. I'll direct this to Jo-Anne. Peter asks, about fees, “If I pay fees to CFS, as well as to my financial advisor, do you take the fees from my account and pass on some to the advisor while keeping some for yourself?” Jo-Anne.

    JO-ANNE BLOCH:
    Thanks and fees can be a complex matter, but no, the answer is no we don't. The two are very separate. Product fees and advise fees are very separate, and there is legislation in place to make sure that this does not happen. CFS does not make payments to financial advisors out of our fees. Any fees paid to your financial advisor is something that you will have negotiated and discussed with your advisor, and it's something that gets paid to them. So again, very separate.

    TODD STEVENSON:
    Thank you, Jo-Anne. Now Albert in Queensland asks, suggests that the CFS website be made more user friendly to navigate, such as managing accounts and changing investment preferences. And I'll take this one, Albert, given that that sits within my daily remit of the work that we do at Colonial First State. We are continue to invest in our digital assets and continue to make ongoing improvements. A number of my colleagues have mentioned the investment that we're making in our systems over the coming years. So that will go to improving our mobile app, that I've mentioned. It will go to improving our public facing website and our secure platform called FirstNet, which will make it easier for you to transact. We continue to make monthly drops and improvements to the app, so I encourage you all to please share your feedback with us because we seriously do take that into consideration. In the second half of this year, we'll also be releasing a new price and performance feature that will make it much easier for you to search and understand the fees, performance and underlying investments of the funds that you're invested in. So we'll again communicate out to you once that enhancements made. The next question comes to us from Francis. And the question reads. “How has my CFS pension performed compared to industry funds? Can you explain?” I might get you to answer that Kelly.

    KELLY POWER:
    Yeah, look, it's not a, sort of, simple answer, because without knowing your particular circumstances, Francis, and where you're invested, it's hard to provide a comparison. I mean, as we've sort of talked about today, we have a broad range of investment options. We have members that are in pensions, so 166,000 members in pension and typically those members are more conservatively invested. So have a mix of assets that are more high risk and a mix of assets that are lower risk or income-producing assets to support your pension payments. And so I think the best thing that I could suggest was to go onto our website and have a look at the returns for your particular investment option or to speak to your financial advisor. I mean, broadly, as I mentioned earlier, for the year, across all of our funds for the year up to 30 June 2021, we did outperform the industry average for that year and over the last 10 years for our FirstChoice Wholesale product, which in the growth fund, it's been 8% return for you, which is very competitive.

    TODD STEVENSON:
    Thank you, Kelly. The next question is received from Michael in Queensland, and the question reads, “If the period being reported ended on 30 June, 2021, why does it take until March 2022 for this meeting to be held?” I might directed to you, Kelly.

    KELLY POWER:
    Yeah, great question and there are a number of factors that have meant the meeting is being held today. I think what I'll say is that, I'll take your feedback on board, Michael, and we will look for an earlier date for next year's meeting. There are certain specific things that we need to include or have in the meeting and that impacted the date this year, as well as Covid and a bunch of other things. But in terms of our approach for next year, thanks for the feedback and absolutely, we will take that into account and we will bring forward the date, so thank you.

    TODD STEVENSON:
    Thank you, Kelly. I'll answer the next question and it comes to us from Ted and it's been submitted online. Ted asks, “How do I rebalance my allocated pension online as I have lost my CFP financial planner?” Now, Ted, you can do this online through FirstNet investor, so go to our website. Once you've logged in, you can switch between various assets by clicking on manage my account. Now, if you need assistance logging into your account, you can call us and our contact centre on 13 13 36. As we've mentioned a number of times today, if you'd like to connect with a new financial planner, again, you can go to our website and visit the find an advisor tool to find an advisor in your local area. Thank you, Ted. Now that concludes the questions that we've received for today. I do want to thank you all for those members that submitted questions and for your attendance today. It's been great to see your interest. A recording and a transcript of today's meeting, as well as the Q&As, will be available on the website in the coming weeks. Now, if following today's meeting, you have further questions about your super or retirement, please contact your financial advisor. If you don't have an advisor, and as I've mentioned again previously, you can use our find an advisor tool on our website. Again, if you haven't downloaded our app, please search your app store and do so, and you can also connect with us on our social channels. I want to thank you again for joining. I really want to thank you for being members and customers of Colonial First State. We certainly appreciate working with you and we welcome you back - oh, sorry - we hope to welcome you back next year. Hope you all have a good afternoon and thank you.

Avanteos Investments Limited

Please find information relating to the Annual Members’ Meeting held on 10 March 2022, 4pm to 5pm.

  • TODD STEVENSON:
    Good afternoon. My name is Todd Stevenson, and I'm the Chief Customer Officer for Colonial First State. I'd like to welcome you to the Second Annual Members’ Meeting for Avanteos Investments Limited. In the spirit of reconciliation, I acknowledge the traditional custodians of our country throughout Australia, and pay respects to their elders past, present and emerging. Today, we'll hear from our Chair, Greg Cooper, who'll provide an overview of the investment program underway within CFS, and the benefits that will be delivered to you, our members. Kelly Power, Chief Executive Officer of CFS Superannuation, will then provide an operational update on behalf of the CFS management team. Lastly, Scott Tully, General Manager Investments, will provide an update on market developments and the impact they have had on your investments over the last year. We're also joined online by Stephanie Smith from PwC as our auditor, the CFS Executive Team, and our Trustee Directors. Following the presentations, we'll open up for your questions, which our speakers and directors will answer.

    Thank you to those members who sent through questions prior to the meeting. It's very pleasing to see the high level of interest expressed. We'll aim to answer as many of your questions as we can, and also make time to answer questions from our members watching our webcast today. If you'd like to submit a question during the meeting, click on the 'Join' button on the bottom right hand corner of your screen, and type your name into the pop-up box, and then hit 'Submit'. You are then able to type your question in the bottom right-hand corner of your screen. I would now like to introduce our Chair, Greg Cooper, to provide his update.

    GREG COOPER:
    Good afternoon. I'm Greg Cooper, the Chair of Avanteos Investments Limited. And I would like to thank you for joining us today. Today is an opportunity for us to share progress on our vision to be Australia's first choice for retirement and investment savings. We have very clear objectives to get there. They include consistently generating strong long-term returns, sharing the benefits of our size and scale as one of Australia's largest super and investment businesses, to make sure you receive the best possible products at the lowest possible prices, and continuing to innovate through investing in products and services. Over the last two years, the global pandemic has sharpened Australians' focus on their retirement savings and investments. The enduring lockdowns and closed borders have had a significant impact on people's lives. I also want to acknowledge the terrible situation in the Ukraine and the fear and suffering of those affected by war, and any of our members who have ties to the region. I'd also like to acknowledge the floods in Queensland and New South Wales. Our thoughts are also with the communities and our members that are being directly impacted.

    However, there's positive news in Australia, too. We're seeing greater economic growth and lower unemployment as our borders reopen. The majority of Australians are now fully vaccinated against COVID. And for many of us, we're finally able to return to living a more normal daily life. Our board and the team have worked exceptionally hard to navigate through the last two years, and the ongoing market volatility to deliver strong returns. It's all part of creating the best retirement outcomes for you, our members, which is at the heart of everything we do.

    In December, CFS embarked on an exciting new phase as a standalone business, following the sale by CBA of a 55% stake in CFS, to global investment firm, KKR. This benefits members by delivering a range of improvements to products and services, with more than $430 million being invested in the business over the next four years. Thanks to the support of our shareholders KKR and CBA. Improving your service experience, including greater digital investment, to make it easier to track your super and investments, and complete everyday transactions. Providing a bigger range of products and greater choice and access to world class technology for you and for the financial advisers that work with many of our members.

    Last week, the Australian Government advised super funds to divest Russian assets. We're working with investment managers to divest Russian debt and equity investments. We have also prohibited the purchase of any new investments in Russia. Our portfolio exposures in Russia currently comprise less than 0.1% of total funds under administration. The divestment will be completed as quickly as conditions permit, noting that some key markets are currently closed.

    We will also continue to comply with all sanctions imposed on Russia by the Australian government. Another key focus has been playing our part in addressing climate change. Climate change is a front-of-mind concern for governments, businesses and communities. We recognise the role we need to play on environmental, social and governance, or ESG issues, for our members as a significant investment manager and employer and helping the transition to a low carbon economy.

    Climate change is one of a number of important and foreseeable environmental and social risks that have the potential to materially change the value of investments. We believe good investment management of ESG risks can enhance the potential long-term performance of companies, and in turn, improve returns for members. We announced our Climate Change Policy in October last year, which includes our commitment to transitioning our investment portfolios to net zero emissions by 2050. We've also created a Climate Action Plan, which sets out how we will transition our portfolios while continuing to manage our investments to deliver the best outcomes for members. We'll continue to make meaningful progress in the year ahead.

    CFS is continuing to focus on providing competitive fees. We're committed to further improving our competitiveness, and our investment program will create more capacity to reinvest in growth areas and pass the benefits of our size and scale back to members through lower fees in the future. Our leadership team has also been refreshed. We appointed Kelly Power to the role of Chief Executive of CFS' superannuation business. And Kelly also joined the Trustee Board. We also welcomed new additions to the Board, including Jo-Anne Bloch, who has extensive experience in super and innovation. Jo-Anne was appointed as an Independent Non-Executive Director in October. John Brogden also joined as an Independent Non-Executive Director. John has a deep understanding of super and financial services. And as a patron of Lifeline Australia, is a passionate advocate for mental health and wellbeing.

    As Chair, I want to thank my fellow Non-Executive Board Directors, Penni James and Ben Heap, for their continued contribution and strong focus on improving outcomes for members. In closing, I want to extend my thanks to the CFS team and financial advisers, for their continued commitment and for helping to build a stronger CFS that's very focused on increasing benefits to members. Finally, I want to thank you, our members, for the trust you have shown CFS throughout the past year. You can be assured about our commitment to even better service, increasing our benefits, and improving your retirement outcomes. Thank you.

    TODD STEVENSON:
    Thank you, Greg. I would now like to introduce Kelly Power to provide an update on behalf of the CFS Executive Team. Thank you, Kelly.

    KELLY POWER:
    Hello. I'm Kelly Power. I'm the CEO of CFS Superannuation. And it's great to have so many members joining us today. I'm looking forward to updating you on our priorities and answering as many of your questions as we can. Our members are always at the forefront of decisions made at CFS, and especially during the challenges of the last few years. We manage approximately $150 billion in funds for almost one million Australians. And we're proud to be the largest payer of pensions after the Federal Government. We actually manage pensions for more than 166,000 of our members. We're very focused on making progress towards our vision to be Australia's first choice for retirement and investment savings, and on delivering great results for you, our members.

    At last year's meeting, there was a lot of interest in hearing more about the sale of 55% of CFS, by the Commonwealth Bank to KKR, who are a global investment firm, and about how that change would deliver better outcomes for you. On 1 December last year, CFS became a standalone company with the sale of 55% of CFS when that was completed. We're delighted that we now have two very supportive shareholders in KKR, and the Commonwealth Bank. And with their backing, we're investing more than $430 million over the next four years, to power the growth of your retirement savings and your investments. This investment is being made by our shareholders. We have not increased your fees to make the investment. And in fact, we have been consistently reducing your fees. I know from reading each of the questions submitted ahead of this session, that you're interested in a number of things.
    Firstly, we appreciate that first and foremost, performance NETA fees is something that is very important to you, and that you're interested to hear more about. Secondly, the services we provide to you, and how they can help to keep you more informed and engaged. And finally, our commitment on Climate Change, and our focus on environmental, social and governance, or ESG, issues. We'll answer as many questions as we can today, but for those that we can't get to, we'll reply to you following the meeting.

    So firstly, in regards to performance. It's important to know that super is a long term investment. And after buying a home, it's typically the biggest investment many people will have. By staying true to our focus on delivering strong returns for our members over the long run, we're pleased to report solid investment performance in the last financial year. Our choice products have had a strong year. Our First Choice Growth option is one of our larger funds and used by many of our members in Wrap. It returned 21.3% NETA fees and taxes over the 12 months to 30 June and has returned 8.3% per annum over ten years. The fund was also recently ranked in the top group for performance of growth funds over ten years by Chant West.

    I know from listening to your feedback and questions, that service is also really important. And the good news is that much of the $430 million we're investing over the next four years is focused on providing better products and services for you. This includes upgrading all of our technology systems to deliver market-leading super and investment services. It also includes improving our digital channels to make it easier for you to track and to make changes to your super and to your investments, including through our app, which I'll get to in a moment. We also have a significant range of investment options for you and your advisor to choose from. And we're also going to make it much easier for you to stay informed with better access to member education, to support, and tools to help build your super savings and navigate the complexities of the retirement system.

    During the early stages of the pandemic, many Australians chose to access their super through what was called the Government's early super release scheme. This included thousands of CFS members. I heard at the time some pretty heart-wrenching stories of members needing to access their funds early to pay for essentials such as food and rent. We took our obligations to help, very seriously. We responded quickly, and we paid out around $1.5 billion to almost 142,000 of our members who requested an early withdrawal of their super. We've received a number of questions from our members about how you can start to rebuild your super or make contributions beyond what your employer pays. Our modelling showed last year, that if you access $10,000 from your super early, making small and regular top-ups over time, when you can afford to, can make a big difference when you hit retirement. So for instance, if you're a 30-year-old, you could see an extra $25,000 in retirement by making an additional $20 contribution a fortnight from your pre-tax income through salary sacrifice.

    Another way you can build your super savings is by making additional contributions from your pre-tax income by salary sacrificing, which includes additional contributions up to your unused super cap of $27,500 a year. At the start of the pandemic the government also reduced the minimum annual pension payment required for account-based pensions and annuities. So members, of course, could call us and choose to receive a higher amount than the minimum at any time. But from 1 July this year, that minimum annual pension payment will return to normal levels. So, for example, for a member between 65 and 74 years of age, this will go back up to 5%. I'd also like to share with you some of the improvements we've made at CFS to benefit our members. We already have a comprehensive investment menu of leading Australian and international investment managers. And we know that providing a wide range of investment options is important to members. So we've added more investment options to our menu, including low-cost index options that you can consider with your advisor.

    We've also added new ESG investing options that take into account ethical and sustainability considerations into the portfolio construction, such as not investing in companies with exposure to tobacco, alcohol, or fossil fuels. We've seen more members engaging digitally with their super over the past two years, and we're investing in providing a better digital experience as well. So we're excited to announce that we're currently piloting a new Wrap app with some of our members, including a new way to view your FirstWrap super, your FirstWrap pension, and your investment account on the go. So members with an eligible FirstWrap account will be able to download the new app from the Apple and the Android stores and register to view their accounts on their mobile phone. You'll be able to login securely with face and fingerprint recognition, and you'll get a full view of how your money is invested across your accounts. Staying up-to-date with all transactions and other activity. The official launch of the app will follow soon in the first half of this year.

    We're also very excited about our new Wrap platform, which will provide an improved digital experience for members, enhance portfolio reporting, and new ESG investment options, in response to increased member demand. The new Wrap platform will be available to new business later on this year. We've also had to manage changes in the regulatory environment as well. The Government has introduced account stapling for super funds. This aims to reduce the costs associated with having unintended multiple super accounts, that can add-up as workers move jobs. For many people, their first job is in retail or in hospitality, before they move to other jobs. So in my case, it was at McDonald's. And where I started out, my super would remain staple to me as I change jobs. So it doesn't necessarily follow you to the next one.

    Another measure, which is something that we've advocated for, is the removal of the $450 monthly income threshold to receive SG payments. This is an important step in improving the retirement savings for low income earners, in particular women, and will help to close the gender super gap. Concessional contribution caps were also lifted last year, increasing the annual limit on taxable contributions up to $27,500. And the super guarantee, or SG rate, increased to 10% from 1 July, and will continue to increase to 12% by 2025. We've made more progress this year for members, and you'll see the improvements in the year to come, as we continue to invest in our business to benefit you. We are proud to be recognised for the work we're doing to support you, our members, including money management, declaring our First Choice Wholesale Personal Super as the best super performer for 2022. And last week, Canstar named CFS the Provider of the Year for Managed Funds, for the fourth year running.

    Before wrapping up, I'd like to echo our Chairman's comments about our members affected by the floods in both Queensland and New South Wales. It's a devastating time, and you're very much in our thoughts. On behalf of our CFS team, thank you for your confidence and your trust. I can assure you that we remain committed to you, and to your retirement goals. I also want to take this opportunity to thank the advisors who work with our members to help them make their financial and retirement objectives, and to thank you for your ongoing support this year. And finally, to our team, I'd like to thank you for your commitment, your unwavering focus on delivering for our members. Thank you, everyone, for your time today.

    TODD STEVENSON:
    Thank you, Kelly. And for our final presentation today, I'm pleased to introduce Scott Tully, General Manager of Investments, to provide his update.

    SCOTT TULLY:
    Good afternoon. My name is Scott Tully, and I am the General Manager of Investments for Colonial First State. Our Chair, Greg Cooper, and Chief Executive Kelly Power have shared their insights on the superannuation landscape, our strategy, operations, and member-first approach. Everything we do at CFS is about helping our members achieve financial freedom in retirement. Through our periods of market volatility and geopolitical uncertainty, our focus remains the same. To generate great returns over the long-term, for our members.

    As you know, the past year has been incredibly challenging for Australians as we continue to deal with the pandemic. The Government stepped in to help businesses and secure jobs, and this critical support allowed our economy to keep moving. Meanwhile, the Reserve Bank played a key role by keeping interest rates at a record low. These actions were very positive for investments over the year. The rollout of the Covid vaccine was a major theme in 2021. Vaccinations became available in late 2020, and by the end of 2021, most developed countries had achieved a vaccination level of 70% or higher. This is a great achievement and one of the most important reasons for the strength of the Global Economic Recovery in 2021, as people were able to get out and spend again. It was against this backdrop that CFS members benefited from exceptional performance in financial markets.
    Despite the challenges of the pandemic and the unwinding of government support, 2021 was a great year to be invested. Equity saw exceptional returns, powered by low rates and strong earnings growth. Share markets in the US, UK, Europe, and Australia, did much better than emerging markets, partly due to lower economic growth in China. Many of you would have seen reports of higher inflation. This has sparked much speculation about when interest rates will rise. While these issues generated plenty of headlines towards the end of 2021, they failed to slow investment performance, and I'm pleased to say that most CFS members enjoyed significant growth for the year.

    Global shares in developed markets were the top performing asset class, delivering a return of 29% over the year. In Australia, the share market delivered a lower but still very substantial return of 18%. As you can see, asset prices have been able to increase during a period of low inflation, and low interest rates. But expectations for higher inflation, unwinding of government support, and rate rises, have started to impact markets in 2022. We believe higher inflation is here to stay, and we'll be watching to see what central banks do.

    Global and domestic shares fell at the start of 2022, and we expect volatility will continue. To higher interest rates and the ongoing nature of the pandemic, we can add the uncertainty that comes from an unstable geopolitical world. The Russian war in Ukraine has led to significant market volatility. Last week, the Australian Government advised super funds to sell their Russian assets. We are working with invest managers to go through the process of selling down Russian debt and equity investments. This process will be completed as quickly as conditions permit, noting that some key markets are currently closed.

    We will continue to comply with all sanctions imposed on Russia by the Australian Government. When it comes to investing, we know that having a long-term outlook means looking beyond short periods of volatility. Depending on how your super is invested, that might mean you see fluctuations in your super balance during periods of market volatility. In Australia, the Reserve Bank is forecasting economic growth in 2022, well above the long-term trend rate. And the economy looks on track to grow by almost 4% this year. Unemployment is currently at 4.2% and is expected to touch lower levels that haven't been seen since the early 1970s.

    Ultimately, it is important to remember that super is not a set and forget investment. It can be helpful to check in with your super and review your investment strategy to ensure it aligns with your goals, financial needs, and investment time horizon. Speaking to a financial adviser can help. In closing, I'd like to thank you, our members, for investing with us and for staying the course. We look forward to continuing to deliver for you in the years ahead, and in building a future that you can enjoy in retirement.

    TODD STEVENSON:
    Thank you, Scott. We now have Greg, Kelly, Scott, and Independent Non-Executive Director Jo-Anne Bloch, here to answer your questions. I want to thank those members who sent questions in prior to the meeting. If you'd like to submit a question during the meeting, click on the 'Join' button on the bottom right-hand corner of your screen. Type your name in the pop-up box and then hit 'Submit'. You're able to type your question in the bottom right-hand corner of your screen. Please note that if your question is of a personal nature, we'll not be able to answer it today due to privacy reasons. However, we will aim to respond to you directly. And if we don't have time to answer your questions today, we'll be publishing answers to all questions on our website following the Annual Member Meeting. We'll now move to our Q&A. And I'll start with a question for you, Greg. And this one has two parts. Sorry, the first part starts with... “With KKR being the majority shareholder, what will the focus of CFS be now? And does KKR plan on splitting CFS in the future?" Greg?

    GREG COOPER:
    Alright. Thanks, Todd. And thanks for the question. So maybe I would just start by saying firstly, KKR is not a fund, it's a financial investor. They're not a strategic buyer. They don't aim to own and operate the business. They back the management team, and a management team that has been put in place to run the business. So CFS is a standalone business with a separate management team, managed by a trustee with majority independent board, who are really committed to delivering the best outcomes for members. As I mentioned in my opening address, KKR, or the broader shareholder KKR, and CBA's focus, is going to be on delivering a range of improvements to products and services, and they've committed to invest more than $430 million in the business over the next four years, improving the service experience, including greater digital investment to make it easier to track your super and investments and complete everyday transactions, and providing a bigger range of products, and greater choice, access to world-class technology for you, and for the financial advisors that work with many of our members.

    TODD STEVENSON:
    Thank you, Greg. Another question that's come through, and we've been receiving this one quite a bit lately, and I'll direct it to you Jo-Anne, is... “Do you take climate risks into account in your investments?"

    JO-ANNE BLOCH:
    Thank you. CFS is committed to being a responsible investor and steward of member's funds. And we'll transition our investment portfolios to net zero emissions by 2050, in line with the goals of the Paris Agreement. We've also committed to reduce greenhouse gas emissions by 30% from the 2019 base levels, and we will review the 2030 target on a regular basis to reflect improvements in data and changes in assets managed by CFS. And if you'd like to look at our commitments, they are available on our website. We offer a range of investment options on our menu, and each investment manager has a different approach to climate risk. We've added some new ESG options more recently. And one of the benefits of this platform is that you can actually choose your investment option based on what you're interested in and how you want to invest your money. So there's plenty on offer to look at.

    TODD STEVENSON:
    Thank you, Jo-Anne. The next question I'll direct to you, Kelly. And you mentioned this a number of times in your presentation. “Can you tell me more about this new platform offer that will be released by the end of the year?"

    KELLY POWER:
    Yeah. Thanks, Todd. So we're really excited about the new platform offer. We're in the build phase at the moment. It'll be launched by the end of this calendar year. And what the new platform will offer is really market-leading features around the areas of investments, managed account management, advisor services, and data management. So it's a part of the investment that I talked about in my update, and I know Greg mentioned around $430 million investment that is being made over the next four years. And this is one of the first parts of that investment launching this new offer. The first step for us was appointing a partner to help us with the build of the technology. And we've appointed FNZ to do that. And FNZ is a global wealth platform technology provider. And they provide technology solutions to a number of financial institutions in the US and in the UK. And they've got good experience on integrating with lots of different types of technology and really cutting edge digital capabilities. So it's something that we're really excited about at CFS.

    TODD STEVENSON:
    Exciting times for the Wrap business and Wrap members. A question again that has come up a number of times in the last week or two. And I'll direct this one to you, Greg, as it is quite topical. “What are you doing about your investments in Russian assets?"

    GREG COOPER:
    Yeah. Thanks, Todd. Very pertinent question at the moment. So last week, the Australian Government advised super funds to divest Russian assets. We're working with the investment managers on the platform to divest Russian debt and equity investments. And we've also prohibited the purchase of any new investment in Russia. It's worth noting our portfolio exposures in Russia currently comprise less than 0.1% of total funds under administration. And the divestment will be completed as quickly as conditions permit. Noting that some of the key markets are currently closed, we will also be doing this in an orderly way to make sure that the best interests of our members are protected.

    TODD STEVENSON:
    Thank you, Greg. A question we've received a number of times, not only in the last week, but in the last year. And I'll direct this to you, Scott. “Is CFS looking at adding crypto currency, or crypto type assets, to their investment options in the near future?”

    SCOTT TULLY:
    Yeah, great question, Todd. And it is absolutely a topical issue. And so let's just start with the definition. What is cryptocurrency? What are crypto assets? You know, it's things like bitcoin, non-fungible tokens, that sort of thing. What do they potentially offer? You know, capital appreciation in their value. But as trustees, we have to make sure that we're comfortable with the safekeeping of those assets, so we know that they can be managed on behalf of our members. We want to make sure that the value is there over a period of time. And look, this area is fast-developing, but at this stage, our assessment is that the crypto space doesn't offer the level of safe custody that we need as a superannuation trustee. And so the answer therefore is no that we're not offering options for super members with that sort of exposure.

    TODD STEVENSON:
    Thank you, Scott. Another question for you is, “What is the outlook for the Australian market as we come through the pandemic and look at some of the instability in international markets?"

    SCOTT TULLY:
    Yeah, again, another topical question. So the pandemic over the last couple of years has obviously had an enormous impact on markets. We saw at the beginning of lockdowns and the like, that markets fell very strongly. Government stepped in, Central Bank stepped in, providing support, cut interest rates. And as a consequence, and perhaps a little bit perversely, but, you know, equity markets and asset prices went up very strongly over the last couple of years. So we've seen this quite wild ride since the beginning of the pandemic. What we're seeing now is the effects of Central Bank starting to talk about, or actually cutting rates, withdrawing support from the markets. And so we've seen in 2022 this comeback in equity markets, although it's still very volatile. What we now have is a situation with the expectation of higher interest rates, the expectation of higher inflation.

    But over the top of that, we've added the Russian war in Ukraine. That's had a material impact on commodity prices. It's had impact on the volatility of equity markets. But it also actually maybe reduces some of the potential for interest rates to be going up during the year. So this has all come into... investment thinking. You know, 'how do you construct a portfolio?' And I think ultimately the important thing to remember is diversification is still critical in this sort of environment. We don't necessarily know what's coming up down the track, so you need to have a portfolio that is spread across your exposures, that is diversified, and doesn't expose you to a single factor, sort of risk, in the outcomes that you're going to receive.

    TODD STEVENSON:
    Thank you, Scott. The next question I'll direct to you, Kelly. And this reads, “I heard about CFS not passing the performance test. Does that impact me?" Kelly.

    KELLY POWER:
    The short answer here is no, that does not impact you. It doesn't impact anyone in this meeting today. That was relating to MySuper, which is a default or employer product. It's not an option or product that's available on the Wrap platform, and therefore it's not applicable.

    TODD STEVENSON:
    Thank you, Kelly. And another question that's come through, and I'll take this one. This question reads, “Many other businesses are encouraging their customers to opt out for paper statements, sorry, "opt out of paper statements, correspondence, etc. And I've made multiple attempts to have my statements and correspondence from CFS sent electronically. Will you be moving to electronic statements?" Kelly mentioned earlier in her presentation, and in response to one of the questions, that we are making a significant investment into our platform and the technology. As part of that, yes, we will be moving to electronic servicing and electronic statements. And we will be uplifting our broader digital capabilities. And Kelly mentioned the app. So we will notify you when statements are made electronically.

    We'll wrap that question there, thank you. The next question I'll direct to Kelly. It reads, "Can you please advise why the cash management account facility with CommBank has been cancelled. And what are the benefits will be to CFS Wrap account holders?"


    KELLY POWER:

    Yeah. Thanks Andrew, for the question. So look, the decision was made by CBA to withdraw the sale of the CommBank Accelerator Cash Account, or the ACA account, as you mentioned, and that was from August. We are looking at other alternatives at the moment. If you're invested in that product, your cash holdings can remain directly with CommSec. Clients can continue to use the default pooled cash account. There are a significant number of investment options that are available on the Wrap menu, and you can work with your financial advisor around one that might be appropriate to you. And as we've mentioned with our new platform that we're building out, we'll be looking for other cash alternatives, similar to the ACA account, as a part of that project.

    TODD STEVENSON:
    Thank you, Kelly. Another question that we've received quite a bit of late, “Is the impact of inflation on super?” Scott, can I ask you to take that one?

    SCOTT TULLY:
    Yes. So, just going back onto a conversation on my comments before around the pandemic and the unwinding of support that Central Banks are bringing along this year. So they're responding, in many ways, to the expectation that inflation is going to be higher in 2022. And it has very much, the conversation's gone from, you know, will there be inflation?' to 'how much inflation there is'. So, this has definitely been part of the reason why equity markets have sold off so far over the last couple of months. That expectation that there's less support, the cost of money is higher, and therefore, the support for equity markets has effectively been reduced, and we've seen that drawback. So it’s absolutely something that's in market pricing. And that's probably an important thing. Markets don't wait until something happens, they precede it. And they adjust on the assumption that certain things are happening. So absolutely, inflation is expected to happen. Interest rates are expected to rise. But having said that, there's still the chance that, you know, things change. So it's something to watch for 2022, in terms of where markets go. But look, a lot of it is factored in already.

    TODD STEVENSON:
    Thank you, Scott. We have a follow up question here for you, Greg. And you mentioned earlier KKR and the KKR ownership. And the question we've just received is, "Who is KKR?"

    GREG COOPER:
    Great question, Todd. And thanks, Peter. So KKR is a global investment firm. Some of you may know them as Kohlberg Kravis Roberts, a US-based firm predominantly specialising in private equity infrastructure. But today have over $642 billion of assets under management, on behalf of their clients. KKR bring to CFS a terrific track record of supporting business growth both in Australia and internationally. And we're delighted to have them as one of our major shareholders. As I noted earlier, you know, KKR, along with CBA, are behind the $430 million investment that's being made in CFS, over the next four years to support, you know, our technology investment and broader growth.

    TODD STEVENSON:
    Another question that we've received, and I might direct this to you Jo-Anne, is, “Should I be salary sacrificing into my super, or making additional contributions into my investment account?"

    JO-ANNE BLOCH:
    Thank you. Salary sacrifice is a very good way to top up your retirement savings. It's tax-effective. But as with everything we know about super, you can't actually access that until retirement, or until you meet certain conditions. So if you are looking to salary sacrifice, just make sure you understand the rules. And if you're not familiar with the rules, then seek professional financial advice so that your personal circumstances can be taken into consideration. But it is a good tool to leverage if it suits your circumstances.

    TODD STEVENSON:
    Thank you, Jo-Anne. Another question I'll direct to you, Kelly. And this reads, “Why do I have to do everything through my advisor on the FirstWrap platform? I choose to take advice from my advisor, but it's ultimately my money. I should be able to provide my advisor with access to the platform if I choose." Kelly.

    KELLY POWER:
    Yeah, it's a good question, Michael. I agree that it is important that we enhance the services that are being provided to members, as well as to advisors. And that's something that's very important to us and is definitely a part of our transformation and investment agenda. We're piloting, as I mentioned in my update, we're piloting a Wrap mobile app at the moment. And that will allow access to information and tracking of investments. And the next step from there is to be able to access more transaction types as well. So the FirstWrap platform is specifically designed to be used with a financial advisor to manage your assets. But I absolutely take your feedback and it is something that we're working through.

    TODD STEVENSON:
    Thank you, Kelly. Now that's actually the last of the questions that we've received today. And as a result, we'll look to conclude today's meeting. I would like to thank you, our members, for your interest and attendance today.

    As I mentioned earlier, a recording and a transcript of the meeting, along with the Q&As, will be available on our website in the coming weeks. If you have, sorry, if you have questions regarding your super or retirement following today, please contact your advisor. You can also connect with us via our social channels.

    I want to thank you again for joining, thank you for being a customer of Colonial First State. And we look forward to welcome you back next year. Have a great evening. Thank you.

FAQ’s

  • The Annual Members’ Meeting (AMM) is an annual event hosted by trustees for members of Super and Pension products. It will provide members with the opportunity to ask questions, hear from some of our executive team and members of the Board as they present the key outcomes and performance for the year ended 30 June 2021, and provide an update on our strategy and priorities for the year ahead.

  • With the uncertainty of Coronavirus and to offer you a safe environment, our Annual Member Meeting will be held online, and you will have an opportunity to submit your questions prior to the event when you register. You will have received instructions on how to submit a question in your invitation, which you may have received via email or mail. Questions can be asked through the registration link.

  • There will be captions on the AMM, but unfortunately not on the Question & Answer sessions. Minutes of the meeting and the Question & Answer session will be available on the website following the meeting.

    Colonial First State FirstChoice, Essential Super, FirstWrap members and other super accounts will be able to access the recording and minutes at: www.cfs.com.au/membermeeting

  • You can submit a question during registration or during the meeting. Please remember to include the super or pension product type your question may relate to. Please note that questions relating to personal circumstances can’t be addressed during the meeting due to privacy restrictions.

  • Yes, they can register online.

  • You can register directly on our website: www.cfs.com.au/membermeeting.

    If you don’t have an email address please call us so we can mail you the details. If you're having difficulty registering please call us for assistance.

  • No, it’s entirely up to you.

  • You don’t have to attend, you can choose to view the recorded video of the event at a later stage or read the meeting minutes.

    • Colonial First State FirstChoice, Essential Super, FirstWrap members and other super accounts will also be able to access the recording and minutes at: www.cfs.com.au/membermeeting
    • FirstWrap members will be able to access the recording and minutes at: firstwrap.com.au and by selecting Offer Documents > Product updates.
  • No, there is no cost to attend the Annual Member Meeting.

  • Yes, it will be an annual member event required to be held by all the RSE Trustees under section 29(P) of the SIS Act introduced in April 2019.

  • You can modify or cancel on the registration page.

  • Yes, the event will be recorded and the video will be published on our website within 1 month of the event.

    • Colonial First State FirstChoice, Essential Super, FirstWrap members and other super accounts will be able to access the recording and minutes at: www.cfs.com.au/membermeeting
    • FirstWrap members will also be able to access the recording and minutes at: firstwrap.com.au and by selecting Offer Documents > Product updates.
  • The Colonial First State (CFS) business unit is collectively made up of Colonial First State Investments Limited (CFSIL) and Avanteos Investments Limited (AIL).

    CFSIL is the Trustee for the following funds: Colonial First State FirstChoice Superannuation Trust, Colonial First State Pooled Superannuation Trust, Colonial First State Rollover and Superannuation Fund, and Commonwealth Essential Super. The products issued include Essential Super, FirstChoice Personal Super, FirstChoice Wholesale Personal Super, FirstChoice Employer Super, FirstChoice Pension, FirstChoice Wholesale Pension, Personal Pension Plan, Rollover and Superannuation Fund, Pooled Superannuation Trust, FirstChoice Pension – Allocated Pension, FirstChoice Pension – Term Allocated Pension, FirstChoice Wholesale Pension – Term Allocated Pension, Total Care Plan Super.

    AIL is the Trustee for Avanteos Superannuation Trust. The products issued include FirstWrap Super and Pension and FirstWrap Plus Super and Pension

  • While we will attempt to respond to all questions, with broader responses in the transcript notes and at the session, we are unable to provide responses to every question. For example, questions that may involve considerations of your personal circumstances and/or irrelevant to the fund and/or if answering would cause detriment to members as a whole will not be answered.

    If you have any questions regarding the Colonial First State AMM please contact your financial adviser or call us on:

    • For Colonial First State FirstChoice and other super accounts - 13 13 36, 8am to 7pm, Monday to Friday (Sydney time).
    • For FirstWrap Service and Support - 1300 769 619 8am to 7pm, Monday to Friday (Melbourne time).
    • If you’re an Essential Super member, please contact us on 13 4074, 8am to 7pm, Monday to Friday (Sydney time).

Disclaimer

Colonial First State Investments Limited ABN 98 002 348 352, AFSL 232468 (CFSIL) is the issuer of FirstChoice Personal Super, FirstChoice Wholesale Personal Super, FirstChoice Pension, FirstChoice Wholesale Pension, FirstChoice Employer Super offered from the Colonial First State FirstChoice Superannuation Trust ABN 26 458 298 557. CFSIL also issues interests in products made available under FirstChoice Investments and FirstChoice Wholesale Investments. CFSIL is the issuer of interests in Commonwealth Essential Super ABN 56 601 925 435 (Essential Super). Essential Super is distributed by the Commonwealth Bank of Australia ABN 48 123 123 124, AFSL 234945 (the Bank). The Bank holds a significant minority interest in CFSIL. Total Care Plan Super is a superannuation product within the Colonial First State FirstChoice Superannuation Trust ABN 26 458 298 557 (the FirstChoice Trust). CFSIL is the trustee of the FirstChoice Trust. AIA Australia is responsible for the administration of Total Care Plan Super and provides insurance benefits to the Fund as insurer. AIA Australia is part of the AIA Group. Avanteos Investments Limited ABN 20 096 259 979, AFSL 245531 (AIL) is the trustee of the Avanteos Superannuation Trust ABN 38 876 896 681 which includes FirstWrap Plus Super and Pension, and is the operator of The Avanteos Wrap Account Service which includes FirstWrap Plus Investments. Colonial First State (CFS) is Superannuation and Investments HoldCo Pty Limited ABN 64 644 660 882 and its subsidiaries which include CFSIL and AIL. The investment performance and the repayment of capital of CFSIL and AIL products is not guaranteed. This document may include general advice but does not take into account your individual objectives, financial situation, needs or taxation circumstances. The Target Market Determinations (TMD) for our financial products can be found at www.cfs.com.au/tmd and include a description of who a financial product is appropriate for. You should read the relevant Product Disclosure Statement (PDS), Financial Services Guide (FSG) or Investor Directed Portfolio Service Guide (IDPS Guide) before making an investment decision and consider talking to a financial adviser. FirstChoice PDSs and the FSG can be obtained from www.cfs.com.au or by calling 13 13 36 and FirstWrap PDSs, FSGs and IDPS Guides can be obtained from www.firstwrap.com.au or from your adviser.