Towers Perrin has been awarded the largest outsourcing deal in Australia’s corporate superannuation history.
Towers Perrin will take on administration, asset consulting and actuarial for the $700 million OneSteel superannuation fund which is to be spun off from the $3.4 billion BHP Superannuation fund when OneSteel is listed on the Australian Stock Exchange.
Towers Perrin came ahead of 11 other groups who had all submitted detailed proposals to handle the massive outsourcing contract. BHP had asked for a service provider to have a master trust style vehicle which could handle defined contribution and defined benefit money. It also stipulated the successful candidate must have excellent member education services.
Warren Chant, the superannuation consultant overseeing the tender process, says Towers Perrin’s new Super Solutions product was a key element of the decision by BHP to choose Towers Perrin.
The Super Solutions product creates a separate trust, a sub trust, under the umbrella of the Super Solution. It differs from both master trusts and industry funds in that it does not pool assets with that of other employers.
Chant says the fact that Towers Perrin has been providing administration support for the BHP super fund for the past few years helped to bring it over the line.
“Towers Perrin has done a great job at BHP Superannuation. BHP Superannuation management knows them and from an employees perspective, there will be no difference to the way the fund is administrated,” he says.
“Superannuation is a very important employee benefit for OneSteel. For example, if an employee contributes 5 per cent to super, OneSteel will contribute 14 per cent.”
Towers Perrin will provide all member education services for the OneSteel workers and uses independent financial planners for members seeking advice.
The OneSteel is by far the biggest outsourcing of corporate superannuation ever undertaken in Australia. It overshadows the next biggest, the $250 million Pasminco fund, which was outsourced to Mercers.
Apart from the sheer size of the funds and the attached prestige of managing such a large fund, the average balance for the fund is $100,000, compared to the $30,000 average for master trusts and $5,000 average for industry funds.
Chant says there is likely to be a number of large outsourcing deals in the near future which are certain to attract similar interest from the financial services industry.
