CEO Update: An eventful first six months

At the time of writing, it’s just about six months since I joined Rest as CEO. It’s certainly been an eventful six months for both Rest and the superannuation industry.

There’s been plenty to contend with. The advent of the Royal Commission into Financial Services, the Productivity Commission’s interim report into the industry, and the Australian Government’s Protecting Your Superannuation Package, all signalled some potentially fundamental changes for the industry on the horizon.

I’d like to discuss some of the most significant events that have shaped my first six months.
Your employees’ super
The Australian Government’s proposed several changes to superannuation legislation earlier this year in the Protecting Your Superannuation Package. These changes could have a significant impact on your employees’ superannuation and insurance coverage.

One of the proposed changes in the Package will see any super accounts with balances less than $6,000 that have been inactive continuously for 13 months transferred to the ATO.
While we support initiatives that reduce the erosion of members’ retirement savings, we believe this proposal will be detrimental to Rest members and many other working Australians.

One of the problems with the proposal is that the definition of inactivity – 13 continuous months without a super contribution – does not truly reflect parental-leave work pauses, as well as casual work patterns.

In late 2017, Rest commissioned research that revealed working Australians take an average of 3.5 career breaks during their working life, with each lasting an average of 16 months.1

Women take 4.2 career breaks on average, most commonly for maternity leave, with an average duration of 17.6 months each.

We estimate that around 240,000 Rest members will have their accounts transferred to the ATO if the proposed changes go through.

These impacted members would earn a return on their retirement savings at less than the rate of inflation and the value of their superannuation will decline in real terms.

By comparison, Rest’s Core Strategy delivered a 10-year return of 7.44 per cent per annum to members as at 30 June 2018.2

Furthermore, some members would also lose their insurance cover when their accounts are transferred to the ATO.

We believe there are better ways to reduce duplicate super accounts and erosion of retirement savings.

Therefore, to enable members to make informed choices about their superannuation and insurance, we are contacting those who would be potentially impacted and giving them the opportunity to keep their account active if they choose.

Members can do this by:
  • opting in to insurance cover
  • nominating Rest as their fund of choice to receive superannuation guarantee contributions;
  • consolidating their super into Rest; and
  • consider making voluntary contributions to grow their retirement savings.
You can read more about Rest’s position on the proposed legislation here.  
Royal Commission
As you may be aware, Rest appeared as a case study during round six of the Royal Commission into financial services, which focused on insurance.

We have been committed to supporting the Royal Commission throughout the process and welcome recommendations that enhance insurance offered as part of superannuation.

We take our obligation to act in the best interests of our members seriously. We insure around 1.5 million members – or one-in-eight working Australians.

We regularly review our insurance products and processes and we learn from every claims experience. Our insurance policy terms are designed to ensure the sustainability of our insurance offering for all our members.

For example, the cost of insurance for our young members is relatively modest. The standard default insurance premium for a 20-year-old Rest member is only $82.16 per year.

During the past two years, Rest paid more than $50 million in insurance claims to members who are younger than 25.

Our most recent insurance design update included several changes to simplify our insurance product, policy wordings and rules. We continue to invest in simplifying the claims process for members to support faster claims decisions and payments.

If you have any specific questions about the Royal Commission or our insurance offering, please feel free to contact your Relationship Manager.

Season’s greetings

Finally, I’d like to thank you all for your continued support of Rest throughout 2018 and wish you all a Merry Christmas.

I hope you all have a successful holiday season, which is, of course, among the busiest and most-important periods for your businesses.

Amid all the extra demands that come with this time of year, I hope you also have the opportunity to relax with your friends and family. It’s certainly been a busy year, so I’m looking forward to spending some time with my family.

1 The survey was conducted by Lonergan Research between 4 October and 9 October 2017 of 1,030 Australians (both males and females) who have ever taken a career break of at least three months.

2 Performance is net of investment fees and tax. The earnings applied to members’ accounts may differ. Past performance is not an indicator of future performance. Returns for ten-year periods are annualised returns. For more details go online to

As we have not taken your circumstances into account, please consider whether this information meets your needs. Go online for a PDS to consider before deciding.

This information is provided by Retail Employees Superannuation Pty Limited ABN 39 001 987 739 as trustee of Rest (Retail Employees Superannuation Trust ABN 62 653 671 394).