CareSuper, a $15 billion industry fund with about 240,000 members, mainly working in professional services, has appointed Mercer as its new administrator. This is Mercer’s first major win since it bought Pillar Administration in late 2016 after a controversial decision by the competition watchdog, the ACCC.
The incumbent, Link Group, which also tried to buy Pillar but was rejected by the ACCC because of its perceived position in the market, announced the CareSuper decision to the ASX last week, along with a commentary on what the Federal Budget’s proposal for so-called ‘lost’ super balances below $6,000 would mean for its bottom line and the industry as a whole. Not a lot, actually, but the share market didn’t like the news. Link shares have fallen from $8.50 on May 7 to $6.98 on May 11 on relatively heavy volumes.
Julie Lander, CareSuper’s chief executive, said that the review, by Deloitte’s well-regarded superannuation partner, Russell Mason, took place after a long period when the fund had not analysed its admin in the new competitive environment.
“The world is changing very quickly,” she said, “especially with new technologies… We decided we needed to have a good look at what we were offering our members, especially in an ‘omni-channel environment.”
This is what the world of super admin is all about these days. Omni-channel services refers to all the additional ways that a fund communicates with its members, and the detail of what information it is offering, including limited investment advice. Both Mercer and Link have been putting a lot of money and time into building out these new services.
Lander said the Deloitte review took more than six months. “Whilst both companies provide a similar range of services, it was determined that Mercer’s solution will enable the fund to meet its strategic objectives more quickly… We would also like to acknowledge the dedication of the team at Link, which has assisted CareSuper’s growth and reputation through its platforms and excellent service delivery to date.”
She said that price was not really an issue, with both firms sharpening their pencils to win the business. “It came down to what we think we can do to enhance the member experience,” she said.
Russell Mason, interestingly, developed the industry fund part of Mercer’s practice from the late 1980s, when Mercer’s co-founder in Australia, Bruce Cook, was anti the industry fund movement. Award Super, introduced by the Labor Government in 1986, split the then-small superannuation industry, resulting in many legal cases of industry funds taking on corporates. In the end, almost all the corporates gave up. Mason worked at Mercer, where he became a global partner, for about 23 years. That certainly does not mean, however, that he would be predisposed to recommending Mercer as a service provider to a client. The opposite is probably true.
The transfer of membership data and new administration procedures from Link to Mercer on CareSuper’s behalf will take place next year. Admin changes take a long time.
Ben Walsh, managing director of Mercer Australia said: “Our significant investments over several years in people capability, process innovation and member-centric state-of-the-art technology solutions will deliver a different kind of perspective and partnership to CareSuper, supporting its strong focus on meeting its members’ needs now, and into the future.”