Each year we are required to assess our performance and, based on that assessment, make an annual determination that we are promoting the financial interests of our members. A separate determination needs to be made for each product we offer.

We offer these products to members:

  • A lifecycle MySuper product, called Glidepath
  • A choice product with five investment options (Cash, Conservative, Balanced, Growth, Aggressive) that comes in a super and income account version
  • A number of defined benefit divisions that are now closed to new entrants

Assessing our performance

In relation to our MySuper and choice products we have established a number of objectives and outcomes we aim to achieve for members that relate to the Plan’s:

  • Investment strategy and level of investment risk and return
  • Insurance strategy and fees
  • Fees and costs that affect the member returns
  • Options, benefits and facilities offered to members
  • Overall size and scale

We have assessed our performance against these objectives and outcomes for the year ending 30 June 2020. A summary of the assessment in each of these areas is set out in more detail below.

We undertake a comprehensive review of defined benefit divisions every three years. You can view the latest report here.

Investments

The investment-related outcomes assessment considers the Plan’s investment strategies and compares the risk and returns achieved by each investment option to comparable products in the industry.

Investment strategy

On a forward-looking basis the investment strategies for each investment option are consistent with its risk and return objectives. All investment options have a probability of more than two thirds of meeting their stated return objective over their recommended investment timeframe.

MySuper Glidepath risk and returns

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

Investment returns

Overall, we’ve observed that our MySuper members received competitive investment returns compared to other MySuper products over a three year period.

Past performance is not a guarantee of future performance.

Level of investment risk

Qantas Super has a safety-first approach to investing, which has generally delivered smoother returns. This can be assessed by reviewing the standard deviation of returns, where a lower standard deviation means less volatility of returns. We observed that Glidepath has had a similar, or in some cases lower, standard deviation of returns compared to the median standard deviation of other MySuper products.

Past performance is not a guarantee of future performance.

The level of investment risk was also assessed by considering the number of years each Glidepath stage is expected to have a negative return over a 20 year timeframe.  Consistent with the standard deviation assessment, it was observed that the level of investment risk for Glidepath is comparable to other MySuper products within the industry.

Risk-adjusted returns

Sharpe ratios are used to understand the return of an investment compared to its risk, or an investment option’s risk-adjusted return. Generally, the greater the value of the Sharpe ratio, the more attractive the risk-adjusted return. All stages of Glidepath had Sharpe ratios that were competitive with other MySuper products.

Past performance is not a guarantee of future performance.

Choice risk and returns

We used survey data from SuperRatings as the basis of our assessment for our choice product. SuperRatings specialise in ratings and research for the super industry and compare funds across a range of quantitative and qualitative factors.

Each investment option under our choice product was considered separately to make it easier to compare to similar products in the industry.

Investment returns

The chart below shows the net of tax and after investment fees returns that are applied to super accounts. The relative performance for income accounts is similar to the returns shown for super accounts.

Past performance is not a guarantee of future performance.

Level of investment risk

The level of investment risk of the choice product has been assessed by considering the standard deviation of returns, where a lower standard deviation means less volatility of returns. We also consider the number of years each investment option offered is expected to have a negative return over a 20 year timeframe.

Overall the level of investment risk for the choice product is comparable to other peer funds within the industry. The Conservative option’s standard deviation outcome is modestly higher than the industry median but is in line with peer funds when considering the expected number of negative returns over a 20 year timeframe.

Past performance is not a guarantee of future performance.

Risk-adjusted returns

Sharpe ratios are used to understand the return of an investment compared to its risk, or an investment option’s risk-adjusted return. Generally, the greater the value of the Sharpe ratio, the more attractive the risk-adjusted return. All investment options had Sharpe ratios that were competitive with the industry median. Of note is that the Cash option’s good performance and low standard deviation resulted in a Sharpe ratio that materially exceeded industry median.

Past performance is not a guarantee of future performance.

Insurance

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.

Premiums do not inappropriately erode members' retirement benefits

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.

Premiums compared to similar products in the industry

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.

Claims ratio experience

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.

Fees and costs

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.

MySuper (Glidepath) product fees and costs

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.

Choice product fees and costs

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.

Options, benefits and facilities

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.

Member feedback results

The rating is issued by SuperRatings Pty Ltd ABN 95 100 192 283 AFSL 311880 (SuperRatings). Ratings are general advice only and have been prepared without taking account of your objectives, financial situation or needs. Consider your personal circumstances, read the product disclosure statement and seek independent financial advice before investing. The rating is not a recommendation to purchase, sell or hold any product. Past performance information is not indicative of future performance. Ratings are subject to change without notice and SuperRatings assumes no obligation to update. SuperRatings uses objective criteria and receives a fee for publishing awards. Visit superratings.com.au for ratings information and to access the full report. © 2020 SuperRatings. All rights reserved.

Overall size and scale

Taking into account the results of the objectives and outcomes described above, the Plan has sufficient scale such that members are not disadvantaged.

We are able to design products specific to the characteristics of our members. The products we offer our members are competitive in terms of investments, insurance, and fees against other comparable products. In addition, the outcomes focussing on options, benefits, and facilities generally demonstrate that our members are satisfied that Qantas Super’s offering meets their needs, and their experience when interacting with the fund is positive.

Determination for the period ending 30 June 2020

MySuper product determination

  • The financial interests of members are being promoted by the Trustee
  • Because of the scale of the Trustee’s business operations, members are not being disadvantaged
  • The MySuper product’s operating costs are not inappropriately affecting the financial interests of members
  • The basis for the setting of fees is appropriate for members
  • The options, benefits and facilities offered are appropriate for the members
  • The investment strategy, including the level of investment risk and return target, is appropriate for members
  • The insurance strategy is appropriate for members
  • The insurance fees charged do not inappropriately erode the retirement incomes of members

Choice product determination

  • The financial interests of the members are being promoted by the Trustee
  • Because of the scale of the Trustee’s business operations, members are not being disadvantaged
  • The choice product’s operating costs are not inappropriately affecting the financial interests of members
  • The basis for the setting of fees is appropriate for members
  • The options, benefits and facilities offered are appropriate for the members
  • The investment strategy, including the level of investment risk and return target, is appropriate for members
  • The insurance strategy is appropriate for members
  • The insurance fees charged do not inappropriately erode the retirement incomes of members