2022 Annual Member Meeting questions and answers
Our second Annual Member Meeting was held online on 2 November 2022. You’ll find answers to the questions we weren’t able to address at the meeting below.
Questions have been grouped by topic and some have been edited for length or clarity. Please note that personal questions relating to specific member accounts or personal circumstances have been removed.
Investment and performance
General performance
| Member questions | Answers |
|---|---|
I am a retiree with a part pension. What benefit do I have staying with GESB in a Conservative plan compared to other funds, which have consistently returned higher returns over the last 10 years? | Our Conservative plans have consistently delivered competitive performance relative to other super funds. As an example, over the 10 years to 30 June 2022, our GESB Super Conservative plan achieved a return of 4.7% per annum after tax and investment fees. This compares to the average (median) Conservative plan return of 4.6% per annum, as calculated by independent research provider, SuperRatings. Our higher risk plans, or other super funds with higher risk profiles, may have achieved higher returns over the past 10 years. However, the expected frequency and size of negative returns from these plans are expected to be greater over shorter time frames. In addition to delivering competitive long-term returns, our Member Outcomes Assessment showed that our fees and costs were among the lowest in the industry. We also provide a number of unique resources to help you make informed decisions about your retirement savings, including our website and Member Online, online tools, such as our Retirement planning calculator, regular webinars and live online chat. Finally, we are the only super fund located in Western Australia, which means we can offer services locally, including our seminars and Member Services Centre. |
Do you suggest keeping super in an account or removing it because of losses in funds? | We are not licensed to provide personal financial advice, so we cannot recommend which option would be best in your circumstances. On our advice page, you will find a simple guide to help you choose a qualified and appropriately licensed financial adviser. In general, though, our investment plans have consistently delivered investment returns that have met stated investment objectives and proven to be sound long-term investments. |
Investment performance
| Member questions | Answers |
|---|---|
Why did I lose more money than previous years? Will you perform better next year? Is it better to choose Cash only as an investment option for next year? | The year ending 30 June 2022 was a tough year for investment markets. Higher inflation and rising interest rates negatively impacted most major markets and the Russian invasion of Ukraine worsened these impacts. Negative returns from investment markets was the main reason for negative returns across many of our GESB plans over the year. Our investment team’s rigorous management of assets meant our returns were slightly higher than the markets in general, but this was not enough to avoid negative returns. We don’t manage our investment portfolios to achieve a particular level of return over any one year. Rather, we aim to provide returns that meet our stated investment objectives, which are generally over five to 10 years – depending on the investment plan. |
Given the negative investment performance by GESB this year, have you taken any action to negotiate reduced fees payable to the external investment entities? If not, why not? | We continually review the investment fees payable to our external investment entities and we have some of the lowest investment fees in the industry. Our fees paid to investment managers across the fund were 0.29% over the 2021/22 year, compared with 0.34% over the previous 2020/21 year. Our total investment fees, including transaction costs, also reduced over the year. For example, total investment fees for My GESB Super reduced from 0.53% to 0.47% from 2020/21 to 2021/22. |
| Why has GESB performed so badly compared to many other super funds? GESB does not feature in any of the top 20 ratings - even with the ATO. | As GESB is regulated by WA state super regulations and not by the Commonwealth Government regulator, Australian Prudential Regulation Authority (APRA), we are often not included in broader industry-wide reporting. For this reason, you generally won’t see us in many super fund lists, including the YourSuper comparison tool published by the Australian Taxation Office (ATO). We focus on managing our investment portfolios to meet our stated investment objectives and we have consistently achieved this. Further, our Member Outcomes Assessment showed that we continue to deliver competitive outcomes for our members. My GESB Super plan achieved a return of -3.8% over the 2021/22 year. This was in line with the median super fund return of -3.8%, as reported by independent research provider, SuperRatings, in their survey of balanced super investment options. While a negative return was disappointing, this was in line with that of other super funds. |
| What do you forecast in regards to current annual member super loses since the COVID-19 pandemic started? | GESB has achieved positive investment returns since the start of the COVID-19 coronavirus pandemic.
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| How much is the ESG tilt of GESB investments affecting returns? Is it under/over performing relative to a benchmark, like the S&P 500? | Our approach to managing our investment portfolios, including consideration of environmental, social and governance (ESG) factors, continues to have a positive impact on returns. To illustrate this, our returns from Shares continue to outperform market benchmarks. For the five years to 30 June 2022, our Australian Shares have returned 7.1% per annum, compared with the S&P/ASX 300 Accumulation index of 6.9% per annum. Our International Shares have returned 8.5% per annum over the same period, compared with the broad market benchmark return of 8.2% per annum. |
| What has been the negative impact of the ESG approach adopted. For example, what is the loss due to not investing in gas, oil and coal? | We aim to understand, manage and monitor ESG-related risks to achieve the best financial outcomes for our members. Our approach has led to a positive impact for members in both managing risks and achieving investment returns that meet our objectives. This is demonstrated by the performance results outlined in our response above. We currently have exposure to companies in the oil and gas industry and through our external investment managers. We aim to engage with these companies to improve financial outcomes for our members and meet our carbon emission commitments. |
| Will an enhanced focus on ESG result in even less returns? | As outlined above, we do not expect lower returns as a result of our ESG approach. |
| If a member placed a portion of their Retirement Income Allocated Pension in Fixed Interest, can one be assured their return over a 12-month period would be greater than the Cash return for the same period? | No. Fixed Interest plans invest in Bonds that provide regular coupons, with capital returned when the Bond matures - assuming the Bond does not default. However, these Bonds are traded regularly on financial markets and their values go up and down on a daily basis. Generally, the biggest factor impacting the value of Bonds is interest rates. If interest rates rise, the value of the Bonds often falls because lower fixed coupon amounts have been ‘locked in’ and will not be as valuable if higher coupons can be obtained from different Bonds. Conversely, falling interest rates will often lead to Bond prices increasing. Over the very long term, we would generally expect Fixed Interest returns to be higher than Cash returns as the level of coupons, or interest, tends to be higher over time. This has been the case over the past 10 years. However, the ups and downs of such returns are also expected to be greater. |
| How does GESB’s performance compare with the median super fund performance in Australia? Can we see some direct comparisons please? Specifically, I'm interested in West State Super but I'm sure that members will be interested in GESB’s performance against the industry median across the board. | We do not provide direct comparisons for West State Super because its unique structure means it is not possible to get a like-for-like comparison. For GESB Super, direct comparisons to other super funds are relevant. Over the year to 30 June 2022, My GESB Super achieved a return of -3.8%. This was in line with the median super fund return of -3.8%, as reported by independent research provider, SuperRatings in their survey of balanced super investment options. While a negative return was disappointing, this was in line with that of other super funds. |
Investment plans/options
| Member questions | Answers |
|---|---|
Is it possible to have more than one investment plan at one time? I’m currently in the Growth plan. Is it possible to stay in this plan for my past and current investment but choose a balanced or default option for my future investment? | No, we do not currently offer this option. If you are a GESB Super or West State Super member, you can choose one of five Readymade plans, or create your own combination of specific asset classes with our Mix Your plan option. If you are a Retirement Income Pension member, you can choose one of four Readymade plans, or select your own mix of investment assets with Mix Your plan. You can also select a combination of Cash and one other Readymade investment plan. You might like to learn more about your super investment options or retirement investment options. You can change your investment plan online at any time - simply log in or register for Member Online. You can also download and print the relevant Investment choice form for your account. |
| In reference to Mix Your plans, has any consideration been given to having separate asset class ‘buckets’ that funds can be allocated to, rather than percentage asset class allocations? Having the ability to control how much goes into each bucket at any given time. If a member feels Shares are expensive then funds can be redirected to Cash without converting everything to Cash. | With our Mix Your plan investment option, you can change which asset classes you are invested in, and the percentage of funds you wish to invest in each asset. This means you can choose any single asset class (Australian Shares, International Shares, Property, Fixed Interest or Cash), or a mixture of these in multiples of 5% (for example, 45% in Australian Shares and 55% in Cash). You might like to learn more about how our Mix Your plan works. You can make changes to your investment plan at any time in Member Online or by using the relevant Investment choice form for your account. |
| Will GESB’s Cash plan interest earning rates go up as interest rates have increased as fast as bank savings rates? | Returns from Cash plans are expected to go up in line with the increase in interest rates. The past return, or earning rate, on our Cash plans, may be lower than a current savings rate, just as the past return on a bank account may be lower than the current savings rate. Also, the earning rate on our Cash plans are after any applicable taxes, while interest on bank savings is before tax. |
| Will you provide a portfolio for members that enables a choice of going carbon neutral or not to get the best returns? |
We have a duty to manage investment portfolios in the best financial interest of our members. That said, we recognise that there are different ways of generating returns and forward-looking returns are uncertain. We are currently developing additional investment plans that have a more accelerated path to being carbon neutral in response to member interest in this type of plan. This still requires operational, strategic and approval processes to overcome but we expect to be able to share further details during 2023. |
| Was the Fixed Interest investment option for West State Super invested in normal term deposits instead of Bonds? | Our Fixed Interest plans are primarily invested in Bonds, rather than term deposits. Term deposits offer returns broadly consist with shorter term cash rates and around half of our Cash portfolio is invested in these accounts. If you wish to gain greater exposure to term deposits, then Cash plans are where these investments mostly sit. You can learn more about the asset mix of our plans in the product dashboard pages of our super investment plans and retirement investment plans. |
Environmental, Social and Governance (ESG)
ESG policy
| Member questions | Answers |
|---|---|
What is ESG? | ESG refers to the Environmental, Social and Governance factors that have the potential to materially impact the long-term sustainability of future investment returns. These factors can arise directly through a company's own operations, indirectly through its customers and suppliers, or in the industry or regulatory environment in which the company operates. Failure to properly consider ESG issues can lead to mispricing investment risk and poor investment decisions. Effective management of ESG issues is an important part of our investment strategy and reflects our Board’s duty to consider the risks associated with different kinds of investments. You can learn more about our ESG approach on our Responsible investing page. |
| GESB’s ESG policy states: 'GESB maintains oversight of active stewardship undertaken by its investment managers' and that it's 'committed to transitioning its investment portfolio to net zero carbon emissions by 2050'. To this effect, have the investment managers tried to limit or stop Woodside and Santos’ new oil and gas development plans to align with the policy? If so, can you give examples? |
Our investment managers have operated within our policies and are committed to a transition to net zero targets. Examples include engaging over several years to encourage decarbonisation through direct engagement (CEO, CFO and Climate Specialist) and collaboratively through the Climate Action 100+ initiative. The aim of this engagement is to develop and articulate a credible path to net zero (for scope 1 & 2 carbon emissions, as defined by the Greenhouse Gas Protocol) by 2050, not necessarily to stop all new gas and oil development. In a world dependent on fossil fuels for many essential functions, with a clear need to reduce such dependencies, our investment managers are focused on ensuring an appropriate transition. |
| Paul said that external investment managers try to ‘engage’ with companies they invest in around ESG - but these external investment managers aren't bound by any claims that GESB makes to ESG. | Our external investment managers are bound by our ESG policy, and our other relevant policies, through legally-binding investment management agreements. |
| Ben said that GESB moved away from risky Russian investments to protect us from financial risk, but he didn't say if GESB had actively continued or pursued investments in weapons businesses that have actively profiteered from this human catastrophe? | In December 2021, our GESB Board agreed to exclude investments in ‘controversial weapons’. This included divesting from companies involved in the production of cluster munitions, anti-personnel landmines, chemical and biological weapons and depleted uranium weapons. The reasons for these exclusions were that controversial weapons have the capacity to kill civilians and disproportionately harm people relative to normal military practices, and their use is prohibited and breaches a number of conventions on human rights. |
Climate change
| Member questions | Answers |
|---|---|
GESB has committed to transitioning its investment portfolio to net zero carbon emissions by 2050. Climate scientists and energy experts are telling us net zero by 2050 means no new coal, oil and gas. Will GESB divest from coal, oil and gas companies such as Santos/Woodside, which takes a final investment decision on new fossil fuel investments? | We seek to understand, manage and monitor ESG risks in line with our members’ best financial interests. In addition, we have an overarching commitment to net zero carbon emissions by 2050, including a 45% reduction in the carbon intensity of our Share portfolio by 2030, from a 2020 baseline. To date, we have achieved a 17% reduction in the carbon intensity of our Share portfolio, which highlights a clear commitment to these aims. We recognise that divesting may not provide desired climate change outcomes as it may involve passing on the issue to a different investor, who may not have net zero commitments. Currently, we have not divested from companies such as Woodside and Santos but would do so if it was deemed to be in the best financial interest of members and consistent with our 2030 and 2050 climate change goals. |
| GESB’s commitment to transition to net zero carbon emissions from the investment portfolio is welcome, but 2050 is rather a long way off. How will GESB accelerate the transition to contribute to decarbonisation and reduce risks to members? | Our GESB Board has set an interim target of reducing the carbon intensity of our investment portfolio by 45% by 2030. This target was changed from 35% during the year in recognition of the significant developments to date and what can be achieved in the best financial interest of members. Our Board has also committed to net zero carbon emissions for our unlisted Property portfolio by 2040. The carbon intensity of our Share portfolio has reduced by 17% since 2020, reflecting a relatively strong start to our journey so far. |
| 1. What is GESB’s exposure to fossil (specifically oil, gas and coal producing) companies? 2. Does GESB have a plan and timeframes over which to reduce its exposure to fossil (specifically oil, gas and coal producing) companies? 3. If not, why not? | 1. Our Share portfolios had approximately 12% exposure to fossil fuel producing companies, including those owning fossil fuel reserves, as at 30 June 2022. This includes companies such as BHP, Santos and Woodside. Our Readymade plans have varying exposure to Shares, so exposure to fossil fuel companies ranges from around 2.7% to 8.5% for these plans. 2. We have a clear plan to reduce the carbon intensity of our investment portfolio, being a 45% reduction for our Share portfolio by 2030 and net zero carbon emissions by 2050. At this stage, any decision to exclude a particular industry, and the timing of any exclusions, will be considered in the context of those targets. 3. As stated above, we have clear targets in place to reduce carbon intensity. Our decisions are based on what is deemed to be in our members’ best financial interest and consistent with stated targets. |
Proxy voting
| Member question | Answer |
|---|---|
How did GESB vote on climate related shareholder resolutions put to Woodside and Santos at their AGMs this year? What was the fund's rationale behind these voting decisions? | This table sets out our votes on climate related resolutions for Woodside and Santos. While there were several reasons for these decisions, ultimately the votes reflect what is expected to be in the best interest of shareholders. The decisions were based on significant engagement with both Woodside and Santos on each issue, with consideration of the progress made to date on climate disclosures and expectations around future changes, and to ensure the appropriate governance and management of the companies. |
General investment information
| Member questions | Answers |
|---|---|
| Given the downturn, is it likely that while values are low is there a capability within a fund to buy up, or are we supposed to put the money into Cash ourselves when the market is up and buy back in when the market is low? | Our Readymade plans are designed so that asset allocation is managed to achieve the plan’s stated investment objectives. This could involve investing more in those asset classes that are expected to perform well and less in those asset classes that are expected to underperform. If you prefer to take greater control over your super account balance, we offer a range of Mix Your plans where you can choose how much of your super you would like to invest in each asset class. |
| What international companies do GESB invest in? 28.5% goes towards International Shares. What companies are these? | We disclose all of our investments, including International Shares, on this website. This information is updated every six months. |
| What is the exposure to European markets? With high costs of energy from the US and the loss of cheap gas from Russia, the industries in Germany in particular are in crisis. | Exposure to European markets represented 19.4% of our International Shares portfolio as at 30 June 2022. Exposure to Germany represented 1.6% of this portfolio. Readymade plans have varying exposure to International Shares, with around 2% to 8% exposure to European markets and less than 1% exposure to Germany, as at 30 June 2022. |
Product and process
| Member questions | Answers |
|---|---|
How much super money is needed for retirement for a single person to live comfortably and have a 4–5-week overseas holiday yearly? Considering all uncertainties and risk, how much saving is required for 15 years in retirement for a couple? | The Association of Superannuation Funds of Australia (ASFA) report regularly on the annual cost for singles and couples to enjoy different standards of living in retirement. ASFA has also produced a guide to the expected lifestyles for a comfortable retirement, modest retirement and retirement relying on the Age Pension alone. You can use our Retirement planning calculator for an estimate of how much you’ll have when you retire, and how long it will last. To learn more and start planning for your retirement, you might also like to join one of our retirement planning seminars. |
If GESB is unable to provide financial advice for superannuation, do you have a list of financial advisers that are recommended? | At GESB, we do not recommend or work with particular financial advisers. However, on our advice page you will find a simple guide to help you choose a qualified and appropriately licensed financial adviser. |
If I previously cancelled my insurance, will I be able to apply now? | You can apply to reinstate your GESB Super or West State Super insurance, but automatic acceptance will no longer apply. You will need to complete a full insurance application, and acceptance may be subject to our Insurer’s medical terms and conditions. You can apply through the insurance section of Member Online, or call us on 13 43 72 and ask for a copy of the full insurance application form.
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I wish to convert my super account with GESB to a Retirement Income Allocated Pension account. Can I complete this process online? | Currently, you will need to complete a paper-based form to set up a new Retirement Income Allocated Pension. This form is included at the end of our Retirement Income Pension Product Information Booklet. Our new Member Online portal has the capability to allow us to move the Retirement Income Pension application process online in the future. |
I have Gold State Super account. How can I determine if I am optimising my super i.e. how can I find out if I am reaching the $27,500 which is the government imposed superannuation cap? | Since your super account receives tax concessions that can reduce the amount of tax you pay, there are limits on the amount that you or your employer can contribute, known as ‘caps’. Our new Member Online portal includes tools and information to help you with your Gold State Super account. These include a breakdown of your contributions and your Average Contribution Rate, and a calculator to help you work out your benefit estimate. |
If we have some extra money, can we deposit this into a GESB account? | We have a range of resources on this website to help you understand your options for adding money to your super and the benefits you may have. You can use our Contributions calculator to help you work out how to make the most of your contributions, or register for one of our seminars or webinars to learn more about growing your super. Please note, we only provide general information in relation to your super with us. If you are looking for more specific advice to suit your situation, you might like to read our guide on seeking personal financial advice. |
Would it be fairer if legislation was amended to have Gold State Super CPI adopted quarterly instead of annually? | Deferred Gold State Super accounts are credited with interest at the rate of:
CPI is the Perth Consumer Price Index (CPI). Perth CPI rates are calculated in accordance with the State Superannuation Regulations 2001. Perth CPI for the 2022/23 financial year is 7.59%, which is an increase from the previous year’s rate of 0.97%. As Perth CPI is calculated annually, the current rate will continue to apply until 30 June 2023, even if interest rates fall during the financial year. |
| Can I deposit proceeds from the sale of an investment property straight into my West State Super account as a lump sum, or should I salary sacrifice all of my pay and live off the proceeds from the sale of the investment property? | At GESB, we are not licensed to provide personal financial advice and recommend that you see a financial adviser for advice specific to your situation. On our advice page, you will find a simple guide to help you choose a qualified and appropriately licensed financial adviser. It’s important that your adviser understands our unique schemes, especially if you have a West State Super or Gold State Super account. Our advice page includes some general questions, as well as more specific questions relating to your account, to help you when choosing and meeting with an adviser. |
| Will there be any opportunity in the future for GESB to become a recognised overseas pension scheme registered with HM revenue and customs, so that UK pension funds can be transferred to Australia? | Our West State Super and GESB Super schemes are no longer listed as Qualified Recognised Overseas Pension Schemes (QROPS), and we are not planning to register for QROPS in the future. In 2015, the UK’s tax, payments and customs authority introduced restrictions on payments. Most super funds, including GESB, could not meet these new requirements. This means we are unable to accept UK pension transfers. |
| Why is CPI for Gold State Super only 0.97% when inflation is so high? | Deferred Gold State Super accounts are credited with interest at the rate of:
CPI is the Perth Consumer Price Index (CPI). Perth CPI rates are calculated in accordance with the State Superannuation Regulations 2001. Perth CPI for the 2022/23 financial year is 7.59%, which is an increase from the previous year’s rate of 0.97%. |
| Is there a tax penalty if more than 50% of your gross wage is salary sacrificed? Does this 50% include the 10.5% employer contribution, or is it just the employer contribution that is taken into account? | Since your super account receives tax concessions that can reduce the amount of tax you pay, there are limits on the amount that you or your employer can contribute. There are two types of limits, or caps:
If you reach your cap and still make contributions to your super, then you may have to pay more tax. Contributions count in the financial year when your super fund receives the money. Our new Member Online portal includes a concessional contributions tracker, to help you keep track of your contributions – and make sure you don’t go over the annual contributions cap. |
General fund information
| Member questions | Answers |
|---|---|
Are GESB investments covered by the government? What if any role has the WA Government in GESB? | If you are a GESB Super, West State Super or Retirement Income Pension member, your investment is linked to the performance of financial markets. We invest your super in a range of financial assets, such as Shares and Bonds. The balance of your super account depends on the performance of these assets, along with any contributions, withdrawals or deductions from your account. If you are a Gold State Super member, you have what is known as a defined benefit scheme. This means your Final Benefit is determined by applying a fixed, or 'defined', formula. Gold State Super is not market-linked, so your funds are not impacted by the performance of investment markets. We are a WA Government statutory authority managing and administering the super and retirement savings of over 245,000 current and former public sector employees. As a statutory authority, and as part of our role as a public sector fund, we provide information, assistance and policy advice to the WA Treasurer on super related matters. |
Is it essential and cost effective for GESB offices to be located in prime city real estate with the associated expensive operational costs? | Many of our members have advised us that it’s important for them to be able to meet with a GESB representative in person. Our Member Services Centre is based in the Perth Central Business District, so our services are accessible to all of our members. |
Thank you for printing this page. Remember to come back to gesb.wa.gov.au for the latest information as our content is updated regularly. This information is correct as at 20 April 2024.