2023 Annual Member Meeting questions and answers

Averaging GESB’s My West State Super’s share investments in Climate Wreckers companies across the whole fund would mean that more than $3 billion of members’ retirement savings are invested in a small number of highly destructive companies, (such as Woodside, Santos, Exxon, Chevron etc), which equates to more than $13,000 of each member’s super contributing to the climate destruction which we cannot ignore. This is at odds with GESB’s commitment to net zero by 2050. Will GESB act now to divest from these entities?

Responsible investment plays an important role in how we manage assets on behalf of our members and the WA State Government over the long term. When investing on behalf of our members, we consider environmental, social and governance (ESG) factors, including climate change, when making investment decisions across the portfolio and throughout the investment process. Refer to our ESG and Responsible Investment Policy for more detail on our approach.

As mentioned at our Annual Member Meeting, we are committed to transitioning the portfolio towards net zero carbon emissions by 2050, which is consistent with the goals of the Paris Agreement and in line with the Western Australian Climate Change Policy. This involves operating in the best financial interest of members, while gradually reducing the carbon intensity of our investment portfolios.

To achieve decarbonisation in an investment portfolio, we acknowledge that there are a number of matters to consider and strategies to explore. Our progress to date has involved adopting low-carbon objective alongside investment risk and return objectives for almost half of our International Share portfolio. Supporting the low-carbon objective are two strategies aimed at reducing our exposure to carbon-intensive companies in favour of companies that are reported to be less carbon-intensive.

We also moved away from an index-tracking emerging market share portfolio in late 2021, where carbon intensity is reported to be materially higher. This resulted in the portfolio owning fewer companies in emerging markets.

Where is it the members preference to have less of their super invested in companies or industries that may negatively impact environmental or social impact, we offer members a Sustainable Balanced investment option. Exclusions are an important part of the investment strategy adopted for the option.

For more information, refer to our Investment choice brochure for details about the GESB Super and West State Super Sustainable Balanced plans, or the Retirement Income Pension Information Booklet for the RI Sustainable Balanced plan.

You can view details of our full stock holdings for each investment option on our What we invest in page. This information is updated every six months.

Questioning GESB’s investment in climate wrecking entities, the argument is put that GESB has to act in the best financial interest of members. Yet over the past decade Woodside and Santos, Australia’s two biggest gas producers, have underperformed against the ASX 200 benchmark of Australian share portfolios. Leaving aside the ecological dimensions, the financial argument to remain invested does not hold. Will GESB refocus member funds on assets which are ethical and sustainable for the sake of our collective futures?

UniSuper, a $125bn fund, divested from thermal coal in 2020 and significantly reduced investments in Climate Wreckers including Woodside and Santos, which came after 15,000 UniSuper members built a powerful divestment campaign. More recently, CommBank and Westpac Bank have responded to pressure from the Finance Sector Union to become the first of the big banks to rule out finance for new oil and gas extraction projects. What will it take for GESB to do the right thing and make courageous decisions? Must we mount a campaign?

In terms of insurance fees, do you recommend having insurance within super? If yes, can we insure ourselves later in our journey towards retirement, or earlier?

GESB isn’t licensed to provide individual financial advice and members need to consider their own circumstances regarding having their insurance within super.

We provide information on our website so you can review your insurance in three simple steps, as well as links to a tool from our Insurer to help you assess your insurance needs. You can also find more information about our insurance products and how you can change or apply for insurance to better suit your needs.

Do automatic contributions towards insurances provide value to members? What percentage of premiums for TPD and others get paid out to members who make claims?

This question was answered during the meeting and an approximate percentage of TPD claims approved and paid was disclosed. It was stated during the meeting that we would provide the exact figure on our website. The exact percentage of TPD claims that were approved for the 2022/23 financial year, where a decision was made on the claim, was 98.72%.

I have an allocated pension with GESB and have two questions: (1) Why does it take 3 or 5 days for my monthly payments to come from my allocated pension account to my nominated bank account when normal interbank transactions take only 1 business day at the most? (2) Who is using my paid funds in the period between the funds being drawn from my pension account to being deposited in my bank account?

When understanding the process of how pension payments are paid from Retirement Income accounts, it is important to note that monies paid are income payments from a superannuation environment, not a banking environment. As such, different processes are followed and payments cannot be made instantaneously or guaranteed to be made on a particular day.

GESB regulations state that all pension payments must be paid on or before the 15th of each month, so this day should be referred to when considering timing of payments.

GESB starts the payment process several days before this time to allow for ‘forward unit pricing’, the steps taken to process the payments, and the time taken to disperse monies to bank accounts. Weekends also need to be considered in the timeframe, as processing is not done on these days, which is why some payments may appear to take longer than usual.

One of the steps for processing payments is the sell down of units from members’ accounts.

GESB uses a ‘forward unit pricing’ system, which enables us to treat all members fairly in the event that there are material movements in unit prices from day to day. This has become widely adopted in the funds management industry and more information regarding this can be found on our Unit prices explained page.

Using a ‘forward unit pricing’ method means members transactions are processed using the unit price that reflects the closing market valuations of the day they are processed, however the unit price will not be known until the following day.

For example, looking at your last RI Allocated Pension payment on 7 November 2023 – this is the date the transaction is effective, which means you will get the unit price for this day. However, due to ‘forward unit pricing’, the unit price will only be known once the markets have closed for that day. GESB then finalises (or strikes) the unit price the following day. The RI Allocated Pension payment was then processed on 9 November 2023.

Due to this process alone, income payments cannot be done instantaneously. You will find that even with most electronic bank transactions, these are not often ‘real time payments’ and can also take up to two business days to process.

As GESB is a not-for-profit reporting entity, any interest accrued during the time the monies are in our bank account waiting to be disbursed to the individual bank accounts, is returned back into the fund.

My question relates to the online retirement planning calculator. Page 10 asks ‘At what age would you like to retire?’ but only allows an answer for an age that is at least 2 years in advance of your entered age on page 1. Will this/can this be amended to reflect one year in advance to reflect a more accurate calculation for retirement in 12 months time?

The Retirement planning calculator is designed to estimate a member’s account balance at retirement, based on incoming contributions as well as other inputs. The calculator requires a minimum of two years pre-retirement to produce an accurate projection. The calculator results are approximate and provide indicative information only. These results are not personal advice.

We are working on a new tool to assist members closer to and into retirement, which we hope to have available in 2024.