Super funds deny early access to super liquidity concerns

Representatives from Qantas Super, IOOF Holdings and Funds SA have confirmed the early release of Super (ERS) did not have a significant impact on their liquidity.

This was despite negative media attention at the time and the Australian Prudential Regulation Authority’s (APRA) confirmation that some funds had experienced material impacts to liquidity.

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In its December 2020 bulletin, APRA said over $6 billion of Australians’ retirement savings were withdrawn between late April and early May 2020.

Speaking at a webinar, Qantas Superannuation’s head of investment operations, Daniel Healy, said Qantas Super was included in negative media attention as fear spread in the community that there would be significant liquidity stress with the standing down of airline staff.

“The quantum of members taking up the scheme would have had to be many, many, many times more than what it was for us to have had any liquidity concern,” said Healy.

He said the only real impact on the fund had been that it required higher monitoring and more oversight processes.

Healy’s sentiment was echoed by Martin Walsh, IOOF Holdings’ trustee board independent director, who said the ERS did not have a material impact on the size of IOOF’s super fund but that it caused a strain on operations as a result of eligibility checks.

Matthew Baynes, senior manager, investment accounting and operations, Funds SA, said the impact was minimal as the vast majority of funds under the Funds SA umbrella were public sector super funds whose members were paid during their stand-down period.

“There were a few – and we only know this by talking with the public sector schemes – but they were certainly masked amongst the accumulation money coming in so we didn’t notice anything at all,” said Baynes.

Healy said the most significant issue was asset allocation during this time of instability – not liquidity.

“The real issue that was overlooked was just keeping track of our asset allocation, our actual assets versus our strategic position, making sure that we’re in ranges, making sure that our rebalancing programme was kicking in and working as it should have.

“And that was driven by the member movements and even funds leaving the plan with the early release scheme – that was something that you really needed to have a close handle on.”