Member outcomes assessment

For the assessment of the default insurance we offer members as at 30 June 2020 in our MySuper and choice (super) products we have:

• Considered whether the premiums paid inappropriately erode retirement benefits
• Compared the premiums payable to comparable products in the industry
• Reviewed the claims ratio, which provides an indication of whether the premiums are too high relative to the actual claims experience

The results for these assessments are mixed but not unexpected given the characteristics of our membership.

When considering insurance, it is important to bear in mind that the higher cost of providing insurance for our members reflects that a significant proportion of the membership are considered to have high risk occupations for insurance purposes. Indeed, some of these members would find it difficult to obtain disability (total and permanent disablement and income protection) insurance outside of the fund at reasonable rates, or at all. That said, we continue to review our insurance arrangements and the level of insurance offered to members to ensure that it is appropriate for their needs and that it represents good value.

Overall, 77% of members have annual death, disability and income protection insurance premiums at or below 1.5% of their salary, which exceeds the target we set.

Across our Plan as a whole, we observed that:

• 71% of our members have death insurance premiums at or below the median premium payable for other funds that provide death insurance
• 75% of our members have total and permanent disablement insurance premiums at or below the median premium payable for other funds that provide total and permanent disablement insurance
• 51% of our members have income protection premiums at or below the median premium payable for other funds that provide income protection insurance

While we would like, and indeed our objective is for, the proportion of members with income protection premiums at or below market median to be above 60%, overall we consider the insurance premiums to be competitive relative to the market when taking into account the characteristics of our members.

The claims ratio is the percentage of insurance premiums paid out in insurance claims. For example, an 80% claims ratio means that for every $1 of premium members have paid for insurance cover, we’ve paid 80 cents in claims. In relation to our Glidepath and choice members, we observed that:

• The claims ratio for death and total and permanent disablement (TPD) insurance was 87%
• The claims ratio for income protection insurance was 67%

The claims ratio for death and TPD insurance is within the expected range. The claims ratio for income protection insurance is modestly below the expected range of 70% to 80%. Overall these results indicate that the premiums were set at a reasonable level relative to the actual claims experience.

The assessment of fees and costs considers the allocation of costs across the membership and compares the investment fees and non-investment fees to comparable products in the industry. Based on the results of the assessment, we concluded that there is a fair and reasonable allocation of costs between products, divisions within the Plan, and the different types of members. As a not-for-profit fund, our fees are set at a level to recover these costs.

When considering fees and costs it is important to bear in mind that the benefits, services and facilities offered by funds are different. We are modestly more expensive than some other funds in the market because our offering is tailored to the needs and circumstances of our members; being current and former employees of Qantas Group.

We’ve assessed each stage of our Glidepath investment option separately. We have taken this approach so that each stage can be more easily compared to other MySuper products. The outcomes and metrics on which we based this assessment are largely prescribed by APRA and required the use of APRA data.

Fees for Glidepath are shown below as a percentage of balance for a member with a $50,000 balance. This is consistent with the average balance of members in Glidepath. Overall, the fees for members in Glidepath are similar to the median fees payable in other MySuper products.

We used survey data from SuperRatings as the basis for our assessment of our choice product. At a total fee level (i.e. where total fees includes investment management fees, investment performance fees and administration fees), the investment options under our choice product generally have modestly higher fees than comparable products, with the exception being the Cash option.

The administration fees for the investment options of our choice product are comparable to the industry median and it is our investment fees that are generally higher. This reflects our highly diversified investment strategy which includes investments in various alternative sub-asset classes and which overall, as demonstrated earlier, has delivered returns (net of tax and after investment fees) that are comparable with the peer median. Looking ahead, we will continue to review our fees.

Fees for choice options are shown below in dollar terms for a member with a $200,000 balance. This is consistent with the average balance of members in our choice product.

The options, benefits and facilities assessment considers whether our overall product and service offering is appropriate for our members. For this assessment we have considered the rating given to us by SuperRatings and the feedback that we have received from you, our members.

We have maintained our “Gold” rating from SuperRatings, which is an independent company that evaluates the service offering that we provide our members, for our MySuper and choice products. The Gold rating is consistent with our member value proposition that “Qantas Super delivers the best product and services to meet my needs as a member”.

We saw improvements over the course of FY19/20 in our member survey. Results for the metrics confidence, satisfaction, ease of doing business and trust, all improved. This is the best result we have received since commencing the survey three years ago in May 2017. Taken together, the SuperRatings assessment and member feedback indicate that overall we are providing appropriate options, benefits and facilities to our members.