John Brumby: turnaround a challenge. Photo: Michael Clayton-Jones
FORMER Victorian premier John Brumby says it could still take two years to complete the turnaround of MTAA Super, but the fund has come a long way since he was brought in to heal the rift on the board.
The comments mark the first time Mr Brumby has spoken so candidly about the prospects for the controversial industry fund. MTAA Super has been in turmoil for years after a string of huge losses incurred since the financial crisis led to a clean-out of its board and the dumping of its long-serving boss Michael Delaney.
The $6 billion fund has been the subject of inquiries by the Australian Prudential Regulation Authority, including over governance issues.
Mr Brumby, who was parachuted into the fund in March 2011 after it fell to the bottom of performance league tables, said his tenure had been a ''bit of a challenge''.
''The fund had a big task … [so] we've restructured the board, brought on new independent directors who've broadened out the skills base of the fund - Sue Dahn and Vicki Allen - we've changed the management, we've rebuilt relationships with industry groups and APRA, and we've successfully rebalanced and reduced our exposure to illiquid, unlisted assets with a better spread of investments and a lower risk profile,'' Mr Brumby said.
''It will still take another year or two for us to turn the fund around completely, but we're well back on the road to recovery, so it's been a good story.''
The comments came as MTAA Super released a guaranteed super stream product - the first large industry fund to do so - which guarantees a monthly pension for life regardless of whether one's account balance drops to zero for reasons other than excess withdrawals.
The product is designed to provide protection against a downturn in the market and ''longevity risk'', and will be payable as a pension.
''There's a growing number of people who are concerned that they'll have an annuity that runs until they're 85, but they'll live till 95,'' Mr Brumby said.
''There are also people who are very worried about what happens if we get another GFC, particularly as they're either in retirement or they're very close to retirement. So this product addresses [those risks].''
Jeremy Cooper, author of the Cooper Review into superannuation, said that the industry was still behind the eight-ball when it came to an ageing population, but products like these went some way to addressing such concerns.
''One of the key things that advisers have to give people advice about is how long their money's going to last,'' he said.
''It's just one of those issues that everybody's found a bit challenging. Conversations about how long people are going to live are difficult to have.
''I think our policymakers are pretty across it, but I think in general the community is quite a way behind.''
Commenting on the 20 per cent increase in the value of local shares in the last six months, Mr Brumby said MTAA Super had benefited from the pick-up.
''It has been significant for every fund, so it's been a welcome turn-up, he said.
''Most importantly, for beneficiaries who've gone year after year with minimal, if not negative, returns, they're back in the black with good numbers. That's true of our fund and it's true of virtually all of the industry funds, so that's a good thing.''