2024 Annual Member Meeting transcript

Start of transcript

Brad Zaknich: Good evening. I’d like to welcome you to GESB’s Annual Member Meeting for 2024. My name is Brad Zaknich and I’m a Key Account Manager here at GESB and I’ll be your MC for this evening.

I’d like to begin by acknowledging the Traditional Custodians of this land, of Elders past and present of which this event takes place. Attending this meeting tonight in an official capacity, we have Esther Conway, our Fund Actuary from Mercer, Patrick Arulsingham from the Office of the Auditor-General, Fiona Drummond from EY, who were our external auditors last year, and Garry Cowan and Mark Maciolek from KPMG, who are our internal auditors.

Also in attendance tonight are our Board members and the Executive Leadership team at GESB. This evening, we had planned to hear from three speakers, being Jo Gaines, our Board Chair, Ben Palmer, our Chief Executive Officer, and Paul Taylor, our Chief Investments Officer. Now, Ben Palmer’s actually been called away this evening to be before Parliament.

As some of you might be aware, there’s been some legislation put before Parliament that would allow GESB members, who have left the public sector, to have their non-state government employer contributions sent to GESB.

Now, Jo will speak more about this during her part of the presentation, but in lieu of Ben being here, Paul will take on the role of providing the CEO discussions.

Now, we do have a few questions that were submitted prior to the meeting. But if you’d like to ask a question live, there is the capacity to do so by clicking on the button at the right hand corner or bottom left, which allows you to ask a question. We’ll get through as many questions as we can this evening, but any questions that we can’t get to or for any reason run out of time, we’ll post those questions and the answers on the website following the presentation.

Please also note that the information in tonight’s presentation is of a general nature and does not constitute legal, taxation or personal financial advice. As always, we encourage our members to consult a suitably qualified financial advisor.

If you have any questions that you want to ask that relate specifically to your account or your membership details, it’s always in your best interest to contact the member services team by calling 13 43 72 or using the online chat facility on the GESB website during working hours.

For our first speaker, I’d like to introduce our Board Chair, Jo Gaines.

Jo Gaines: Thank you, Brad and good evening, everyone. It’s a pleasure to be here as this is a valuable opportunity for us to connect with our members, answer your questions and update you on our achievements from the past financial year, as well as our plans for the future.

I’d also like to respectfully acknowledge that we meet on Whadjuk Land and that our members work on Traditional lands across the state. I pay my respects to their Elders, cultures, communities and Elders past and present.

We take pride in our commitment to providing excellent superannuation and retirement products and services to members and employers. Our focus remains on consistently delivering low fees, competitive long-term investment returns designed to meet our objectives, insurance members can rely on and an exceptional member experience. This involves everything from products and services we offer, through to support, education and accessibility.

We continually assess our performance across a range of measures and against peer funds to ensure that we’re promoting the best financial interests of our members. Our performance over the financial year has demonstrated our commitment to this outcome.

Our readymade investment plans achieve returns over the year that were above benchmark, with My GESB Super returning 10.4%, My West State Super returning 10% and Retirement Income Conservative returning 7%.

The majority of our readymade plans remain ahead of their investment return objectives, demonstrating the long-term effectiveness [of our] diversified, risk-managed investment strategy.

Our fees, which are an important part of ensuring you get the best out of your super, continue to be the equivalent to the lowest fee quartile of My Super Funds in Australia. Our operating expenses relative to the size of our membership base and assets are the lowest quartile and well below industry mediums.

GESB has also achieved the lowest average time to decision in the half of year to December 2023 for insurance claims, when compared against the average in the industry for the same period.

Our purpose remains steadfastly on helping you achieve a quality retirement. An important part of our role as a Board is to provide clear strategic direction, so that purpose can be realised. With this in mind, I would like to update you on two significant strategic initiatives that we’ve progressed over the past year.

We’ve continued our focus on GESB One Fund initiative and the state legislative amendments necessary to enable GESB to accept contributions from non-WA public sector employers. As Brad said earlier, the changes to the Superannuation Act are currently listed to be debated in the upper house of Parliament today. We’re very hopeful that they will be passed and become law.

This final stage will enable our current and former public sector members to keep all their super with GESB throughout their working life and in retirement. The changes mean GESB will be able to accept super contributions from non-WA government employers, so existing members will have more flexibility and choice.

They’ll be able to elect keep all their superannuation with GESB if they leave the WA public sector, or start a second job with a non-government employer. This will make it easier for them to manage their super, reduce the need to have accounts with multiple superannuation funds and help minimise the fees they pay.

Previously, GESB members who left the public sector or had dual government and non-government employment, were required to open up a super account with another fund, leading to duplicate accounts and fees. This has been a lengthy and complex undertaking and one we’ve been working on for a number of years. I would like to acknowledge the incredible commitment of the organisation and staff that they’ve made to progressing this initiative on behalf of our members.

We’ve also focused on the Retirement Income Strategy. We’re working on initiatives to enhance our retirement products to better meet members’ needs, to provide accessible education, support and services to help members make informed and confident decisions about their super and retirement.

The strategy focuses on assisting members who are retired or approaching retirement. We know this is a difficult time in people’s lives and is aligned with the objectives of the Australian Government’s Retirement Income Covenant. The objectives are to maximise expected retirement income over the period of retirement, to manage risk to the sustainability and stability of your retirement income including longevity, investment and inflation risks and for members to have flexible access to funds during retirement.

Our intention is to help members make complex decisions when they’re approaching retirement and to have the confidence to access their superannuation savings in a sustainable way to enjoy their retirement. We will achieve this by focusing on four strategic areas.

First, we are seeking to better understand the needs, expectations and situational and demographic factors of members who are approaching retirement. Second, we will aim to ensure our products meet members’ needs and help them maximise their income in retirement. Third is the provision of education and support, so our members approaching and in retirement can make informed decisions about their future. Finally, delivering services that are accessible, responsive and easy to use, including enhanced support for vulnerable members.

To date, we’ve implemented a number of initiatives including member profiling and qualitative research, a review of our retirement income products, website enhancements, a retirement planning calculator and retirement income projections. These are a number of projects underway and there are even more, including a comprehensive retirement program, a how long will my money last calculator and adviser engagement.

I would like to thank the GESB Board and the Committee members, the Executive Leadership team and GESB staff for their work and dedication. It has been a significant year for the fund and it could not have been achieved without their collective contribution.

I also extend my thanks to our members for your continued support of GESB. I reaffirm the Board’s commitment to strong governance and robust stewardship of our members’ funds. Thank you very much.

Brad Zaknich: Thanks Jo. Our second speaker for the evening will have been Ben Palmer, but as we know, Ben’s not with us this evening. He’s absent at Parliament. In lieu of that, I’ll have Paul Taylor conduct the CEO report.

Paul Taylor: Thanks Brad. I’m really pleased to provide this update on behalf of Ben and the rest of the organisation. Good evening and thank you for joining us at this 2024 Annual Members’ Meeting.

It is a privilege to lead an organisation that puts members first in everything we do. Our purpose is to help members, our current and former public sector colleagues achieve a quality retirement. Which is why I’m happy to report on another successful year for GESB.

Our competitive returns - which will be discussed in detail later by - well, by me - were backed by operational achievements that continue to position the fund strongly in the market and earn industry wide recognition.

Leading industry rating agency, SuperRatings, reported that our My GESB Super Plan maintained its place as a top 10 performing balanced option for the year to 30 June 2024, following a top 10 performance over 2023. In 2024, SuperRatings ranked GESB Super at number 8 on a list of 50 funds with balanced options.

We were also recognised by another of Australia’s leading financial services research companies, Rainmaker. Rainmaker ratings are an independent stamp of approval and have been a symbol of excellence amongst superannuation funds for more than two decades.

Our Retirement Income, or RI, allocated pension and GESB Super Schemes were recognised with a Rainmaker AAA rating for quality and outstanding results across a number of benchmarks, including organisational strength, communications, investment performance and insurance.

We were also recognised as a Rainmaker ESG Leader for the second consecutive year. Out of almost 110 funds, GESB was one of only 16 funds to achieve this ESG Leader rating, which recognises the implementation of environmental, social and governance, or ESG, principles to a high level with the track record of strong investment performance.

To further support our commitment to responsible investing, during the year we introduced our Sustainable Balanced investment option. This is to meet the needs of those members who want to invest their super with a greater focus on ESG factors.

We also continue to incorporate ESG considerations throughout our investment process and across all our investment plans, consistent with improving the long-term financial outcomes for members.

Furthermore, our approach to ESG management extends beyond our investment portfolio to our business operations and decision making processes and is reflected more broadly across our internal policies and business practices.

The past financial year saw us continue to work with key stakeholders in the WA public sector to implement state and Commonwealth changes to superannuation and align GESB with a wider super industry. As a WA Government statutory authority, GESB is governed by the state Superannuation Act, rather than Commonwealth legislation.

Many of the changes we’ve been working to implement align GESB with the broader superannuation industry and the Australian Government’s superannuation reforms. However, implementation of these initiatives by GESB typically requires changes to Western Australian state superannuation legislation and regulations with the support of the WA Government and key stakeholders.

The GESB One Fund initiative, as discussed by Jo, responds to the Commonwealth Your Future, Your Super package and is one of the more significant projects in GESB’s history. The team at GESB has worked hard to progress these changes as soon as possible for the benefit of our almost quarter of a million members.

I’m pleased to report the changes aligned with the Protecting Your Super package came into effect for GESB members on 25 September this year. We now apply industry standard measures to protect members who are not making regular contributions to their accumulation accounts by stopping their super being eroded by account fees and insurance premiums.

These reforms mean insurance in inactive accounts can now only be retained by a positive opt in from the member. GESB is required to transfer inactive, low balance accounts to the Australian Tax Office after a specified period of account inactivity for consolidation into that member’s active superannuation account.

A full explanation of these changes and the criteria under which the measures will apply can be found on our website. All our members would’ve already received a significant event notice with their annual member statement detailing these changes.

We’ve also introduced improvements to help members applying to access their super due to financial hardship or compassionate grounds. One of the core tenants of our Members Experiencing Vulnerability Policy is to make the process of applying for release of funds easier for our vulnerable members.

Based on member feedback, we’ve made changes to application forms, we’ve produced an easy-to-follow fact sheet and we’ve simplified our processes, demonstrating our commitment to our members and doing what we can to assist them in times of hardship.

Ease of access for our members remains a priority. GESB was acknowledged as a contributor to the accessibility and inclusivity of - thanks, Ben, for that doozy there - standard released in January 2024 by the WA Office of Digital Government.

In recent years, we’ve made significant progress ensuring our website, secure member online platform and other digital assets meet high accessibility standards, providing members with an inclusive and positive experience when they interact with us.

As we look to the year ahead, GESB will going to develop and evolve as we fulfill our purpose of helping our members achieve a quality retirement. Some of you may have seen that GESB recently advertised two executive positions. A Chief Member Experience Officer and a Chief Corporate Services Officer. We intend to fill these roles in the coming months.

These changes to our executive structure and responsibilities within GESB align with the - with prevailing industry better practice and serve to ensure that GESB will continue to deliver strong and highly competitive member outcomes into the future.

In closing, I would like to take this opportunity to acknowledge our Board for the support, strategic oversight and direction. Thanks Jo. I’d also like to thank all of our staff, who come to work each day with a commitment to putting our members first, serving and supporting the WA public sector workforce and understanding that what we achieve, we achieve together. Thanks everyone.

Finally, thank you to you, our members. As I said in my opening remarks, it is a privilege to be entrusted to look after the retirement savings of our current and former public sector colleagues. I look forward to answering your questions at the end of the presentations. Thank you.

Brad Zaknich: Thanks Paul, in lieu of Ben. Now you get the opportunity again to have another chat. We’re going to introduce Paul Taylor again, but Paul will now be speaking as Chief Investments Officer.

Paul Taylor: Thanks Brad. I feel like I’ve just done this before. But this time we’ll focus on investments, as you said. I am pleased to report that GESB continues to deliver competitive investment returns with low fees and a strong emphasis on managing risks.

Tonight, I’ll summarise investment highlights over the year and what this means for longer term returns. This will include a summary of our investment performance, a comparison of our fees to other superannuation funds and an update on our climate change commitments. I’ll also provide a glimpse into current investment market conditions and what this may mean going forward.

Over the past year to 30 June, GESB was one of Australia’s top performing superannuation funds. The graphs show the performance of GESB’s super readymade plans against the average return of other superannuation funds, as provided by independent superannuation research provider, SuperRatings.

The graph shows that across GESB’s super readymade plans, performance has typically been above median over one and three years and broadly in line with median over five years. Also, in the SuperRatings’ survey of the top 50 superannuation funds over the year, GESB ranked in the top 10 across growth, balanced, conservative balanced and capital stable surveys. The GESB Super Conservative plan ranked particularly high, being second place in the comparable survey.

Achieving such strong results over the year was pleasing, given the challenging investment environment. We are proud to deliver these returns to you.

Another way of summarising our performance is to compare against benchmark returns. These benchmarks assume that assets are invested in line with strategic asset allocations and the return from each asset class match the relevant index return.

The graphs show performance across select West State Super, GESB Super and Retirement Income plans over the past one year, three years and five years. Whilst we show different - or three different timeframes, our target for performance against benchmark returns are based on three year time periods. We’ve consistently achieved returns close to or above benchmarks over these time periods after fees, which is what we strive to deliver to our members.

I’ll dig a bit deeper into this. This next graph compares how GESB has performed in each asset class against market returns over the past three years. We’re showing three years as this is the timeframe set by the Board for performance assessment for each asset class. To be clear, these are the underlying asset class returns that feed into various plans, not the performance of any particular plan.

Over this time period, GESB has outperformed the market in Australian Shares, International Shares, Listed Property, Infrastructure, Bonds and Cash. This is due to the performance of GESB’s selected investment managers across various asset classes and is a primary reason for the above benchmark returns of readymade and mix your plans. Our goal is to achieve above benchmark returns on a consistent basis and it was pleasing to have delivered this over the past three years.

Now, turning attention to what this means for long-term performance. This graph summarises the performance of some of our readymade plans across West State Super, GESB Super and Retirement Income against their CPI plus return objectives. The plans shown are measured over rolling seven year timeframes, reflecting the minimum recommended time horizon for each plan’s risk profile.

The relatively flat, though increasing pink line shows the primary return objective, which is CPI plus 3% per annum for those plans. The other coloured lines on the chart show the actual rates of return achieved by these investment plans over time. The graph shows that while performance can fluctuate from year to year, our plan to achieve returns that meet their objectives with a high degree of consistency over the long-term.

It’s important to remember that superannuation is a long-term investment. While we won’t achieve the targeted level of returns every year, our focus remains on achieving objectives over the long-term so you, our members, can enjoy a quality retirement.

Another important factor that impacts investment returns is fees. We ensure our fees offer value for money and are competitive with other superannuation funds. This remains a priority.  Our investment fees continue to be at the lower end of superannuation funds, with the chart showing fee levels based on a $50,000 account balance.

Our intention is not to be the cheapest fund, as this may limit our ability to invest in a diversified range of high quality investments and add value over time. However, we have consistently been one of the lower cost providers of superannuation and our strategy is for this to continue.

Finally, I’d like to provide an update on how we are managing climate change risk and progress towards our climate change commitments. Our general approach to considering climate change impacts on our investment portfolios is to ensure we make investment decisions based on what is in the best financial interest of our members. This approach supports our purpose to help members achieve a quality retirement.

Within this context, we believe environmental, social and governance factors, including climate change, present both investment risk and opportunities. It is appropriate to consider such factors to achieve the best financial outcomes for our members.

As part of this, the Board is committed to transitioning our investment portfolio to net zero carbon emissions by 2050 with interim targets in place to check our progress. With that in mind, our initial focus was on Australian and international listed shares. These asset classes represent around half of our assets and are therefore significant to our commitments.

Specifically, the Board has an interim target for our listed share portfolio to reduce carbon intensity by 45% by 2030 from a 2020 baseline. During the year, the scope of this interim target was expanded to include both listed property and listed infrastructure. We also have an interim target for our unlisted property portfolio to have net zero carbon emissions by 2040. We’re tracking well against these targets.

The carbon intensity of our listed share portfolio, including listed property and listed infrastructure, has reduced by 28% from 2020 to 2024, which is on target for our 2030 aim. Whilst there was a slight increase in carbon intensity from 2023 levels, it illustrates that this is not expected to be a straight line journey and is more of a reflection of 2023 levels dropping more than target, rather than 2024 levels being elevated.

We continue to look at strategies to support our net zero commitments to ensure they remain on target. Within the unlisted property portfolio, four out of our eight investment portfolios are already at net zero carbon emissions, well in advance of the 2040 target.

Given the strong performance results outlined earlier, these carbon emissions results support our approach of achieving returns in the best financial interest of our members and a gradual, prudent transition to carbon neutrality.

While our current target is based on Scope 1 and Scope 2 emissions, we are aware that Scope 3 is also an important consideration for our net zero commitment. We continue to monitor the climate related reporting requirements, which include Scope 3, and plan to further improve our climate change reporting over time and certainly in line with state government requirements.

If you would like to learn more about our ESG approach, I encourage you to look at the responsible investing page of our website.

Where to from here? Since 30 June, share market performance has generally been strong. As of today, returns from readymade plans have continued to be positive and competitive against other superannuation funds.

Going forward, there are several reasons for optimism over the medium term. Including that inflation has continued to fall and interest rates globally have reduced from their recent highs. This has supported returns across many asset classes. Also, corporate earnings have held up well, meaning share market returns have been solid.

That said, risks do remain. Geopolitical risks are ever present and we are conscious that conflicts within and between countries can have negative - a negative impact on share market performance. Additionally, there is a risk that the elevated interest rates that we’ve experienced could lead to economic weakness in the future.

In weighing up these factors and other factors, we believe our long-term strategic asset allocations remain appropriate for meeting our return objectives. This, however, is reviewed on a regular basis and could change at any time.

On that note, it has been a pleasure to provide this update. I’m still looking forward to addressing your questions shortly. Thank you.

Brad Zaknich: Thanks Paul. Before we start our question and answer section, I’d like to hand back to Jo Gaines for a few words.

Jo Gaines: Thanks Paul. Excuse me, members. I had COVID last week and I’m still coming to the end of the effects of that. In exciting news, I can report that our legislation has just passed through Parliament, which everyone’s very excited about. What that means is that there’s still a lot of work to do before we implement it. Regulations have to be drafted and the date of implementation, we’ll discuss that next week at our Board meeting.

But it’s exciting to be able to tell you that sometime in the near future, we will be able to allow members who leave the public sector to continue to have GESB as their fund of choice. We will advise members going forward. Keep informed by looking at our website et cetera. We’ll let you know when that - the date of implementation as that becomes clearer. Thanks Brad.

Brad Zaknich: No worries. Thanks Jo. We’re going to get ready to start our question and answer session. As we mentioned earlier, some questions had come through prior to this evening and we’ll address those ones first. As I said if you want to ask any questions live, please use the question - ask a question button on the screen, top right hand corner or bottom left hand corner. We’ll get through as many as we can.

The first question that’s come through is from Olga. It’s a question about members who have a GESB Mix Your plan, where you get to choose where your monies are invested independently. It basically asks, if a member wants to change the percentage distribution in the GESB Mix Your plan, all units will be sold and bought again by the new percentage distribution. I’ll try and paraphrase this as best we can.

For example, if a person has 40% Australian Shares, 30% International, 30% Defensive, but in their new plan they switch those around but 40% are still in Australian Shares, what actually happens to those investments?

The first question is are there any fees involved with making these switches? Is there a difference between the unit prices when they’ve been bought and sold? What happens when you actually sell out of investments and buy back in when the percentages are the same? I’m going to hand this one over to Paul.

Paul Taylor: Thanks Brad and thanks for the question, Olga. The three questions there, are there any fees in making a switching? I can confirm, categorically, there are no fees. This is true whether it’s a readymade or a Mix Your plan option.

The second part of the question was around if all the assets are bought and then sold, are there any buy and sell - are the assets bought and sold at different prices? I can again confirm that any assets that you decide to switch, if you’re switching where some of it’s within the same investment plan, the buying and selling will happen at the same price. There’s no buy sell costs, as it’s sometimes referred to. Again, adding to the first bit, there’s no direct costs, there’s no indirect costs. It is a nil cost process to switch your investments.

Then the third part of the question relates to what actually happens in practice, in terms of is it all the units that gets sold and bought again? Is it part of it? Certainly, administratively, what does actually happen and what you will see in your account is that all of the units are sold, and then bought back. But as I said hopefully with the first part of my question, allayed any fears that this doesn’t incur any costs as part of that.

But just adding to that, I think it’s important to consider that just because what you see that those units are sold and bought, that doesn’t mean that we’re out there, going to a share market, selling a whole heap of shares, and then buying a whole heap back.

What we do at GESB is we aggregate and accumulate all the different member decisions - because there’s a lot of members doing a lot of different things, whether it’s making contributions, there might be some withdrawals, there’s switching and a number of things - but aggregating that up. Then the net result of that is only then it’s decided whether we actually do need to actually transact in the market.

What we’ve found that the vast majority of occasions - because there’s lots of buying - well, lots of members, as I said, contributing or drawing a pension or switching, some are switching to more aggressive options, some are switching to more conservative options - that usually they net each other out. That’s why there aren’t any costs involved because we’re able to, as GESB, net each of those transactions out.

I think that’s really positive that you’ve got the backing of, as I said before, closer to quarter of a million members and $40 billion of assets. We are able to have a really efficient process to actually transact on those. That as opposed to if you’re doing it yourself, where you would actually have to buy and sell.

Hope that addressed the question, but certainly no costs involved.

Brad Zaknich: Thanks Paul. Looks like the next one’s going to be for you as well. Another question we got from Breda. The question is if investments are moved to cash from growth, are they safe if there is a share market crash?

Paul Taylor: The short answer is yes, they are. The cash investments have no direct link to share markets. There are things that can affect - I mean depends on why the share market crashed. It might be because of really poor economic outcomes, which might mean lower interest rates, which might mean that the cash returns might not be as high.

But certainly in terms of a preservation of your capital, the impact of share markets crash don’t flow through to cash. But again, just want to also reiterate that cash, although it’s quite a safe investment - or very safe investment in terms of its preservation of capital - the expected long-term return is not as high as what the expected return is on the share market. Hopefully that addressed the question.

Brad Zaknich: I think so. Thanks Paul. We’ve got a few more questions that have come through. The next question is from Stephen. Why is there no fee cap on large holdings, which need no more work than smaller holdings? I think this one looks like you again, Paul.

Paul Taylor: Sure. As I illustrated before, GESB has some of the lowest fees in the industry. That’s across administration fees and also investment fees, so we really do pride ourselves on having a low fee environment. I think what that is referring to is the administration fee where there is an element of a fixed component, where there’s a $5.50 per month fee, plus there is a variable component based on your account balance.

That account balance depends on which scheme you’re in. West State has a lower fee than GESB Super and Retirement Income, actually. That’s probably the other one which doesn’t have that fixed fee, but has the - has that variable fee as part of it.

As I said, on every measure - and we benchmark across other superannuation funds regardless of the account balance - we have very competitive fees across that. Like you said there’s no more work for smaller holdings. I guess every member’s unique and some members contact us a lot more. Which is great, great having engagement.

I guess what we do find, and in general, that high account balances members do interact with us more. Which, again, is fantastic. There is a slight increase in workload from that perspective. But I’d certainly just reiterate that our fees across the board are very competitive.

Brad Zaknich: Thanks again, Paul. I dare say the next question’s going to be for you as well. This is from Rees. Rees actually represents Teachers For Climate Change - Teachers for Climate Australia. This appears to be a reasonably common question, we’ve asked this a few times. Having a net zero by 2050 target means that GESB will, at some point, need to phase out exposure to companies building new fossil fuel projects. Does the fund have a timeline for doing this?

Paul Taylor: Sure. I guess I’ll reiterate a few things on this matter. I guess all of our decisions are based on having the best financial interest of members at the centre of what we do. So, all of our decisions are - do capture that.

The second thing is that we are really transparent with our commitments regarding climate change. All of our commitments are communicated to our members. There’s obviously a lot of work that goes in the background. But when we make a commitment, we certainly communicate all of those to our members. I’ve mentioned our 2030 targets around our carbon intensity, and also our 2040 targets in relation to unlisted properties, as well as our 2050 target. But as I say, these are reviewed very regularly, those particular ones.

If you believe that the pace of change to exposure to various ESG factors don’t meet the needs of whether it’s yourself or other members, we do have the Sustainable Balance plan that you can invest in in order to accelerate that. Certainly the more members that we have in that plan would obviously reduce exposure to such organisations.

Probably the final point I just want to raise in relation to our exposure to fossil fuels’ companies. As at 30 June 2024, exposure to fossil fuel companies - and that includes those with fossil fuel reserves - was 11% of our share portfolio. If you are in a readymade plan, which has a exposure to a broad range of asset classes, the exposure will obviously be less than that. That compares to our 30 June 2023 exposure of 12%, so there has been a reduction over the year.

I guess going back to the question, there is no set timeframe in order to - and there’s no set decision to eliminate exposure to fossil fuel companies at this point in time.

Brad Zaknich: Thanks Paul. We do have more questions. But before we go any further, for those who haven’t met, we’ve got Ben Palmer, who’s just rejoined us, our Chief Executive Officer. I think Ben’s got some words to say.

Ben Palmer: Thanks Brad. Welcome everyone. Belated welcome. Firstly, I’d like to apologise for not being here at the commencement of the Annual Members’ Meeting. As Brad and others would’ve advised, I was actually up at Houses of Parliament and delighted to confirm, as I believe has already been reported, that the State Superannuation Amendment Bill has been passed by the upper house this evening at about 6:18.

Wonderful news for the fund and wonderful news for our members. An excellent development in GESB’s history and really important and necessary to align with the broader superannuation industry, and also to ensure that GESB remains competitive and aligned with the broader superannuation environment. Despite our differences in our regulatory environment and our state agency status.

I think my speech has already been read by Paul. Would’ve been lovely to be able to deliver that myself. But when we scheduled our Annual Members’ Meeting, we certainly didn’t anticipate that our legislation would be the second last session of the Legislative Council this year and our legislation would be up at exactly the same time. A bizarre coincidence, but it’s very pleasing to be able to confirm the outcome of that passage of legislation to you all this evening.

I just really wanted to reiterate the comments in my script. Which are how proud I am to lead GESB and be entrusted by our colleagues in the public sector to look after your retirement savings and service you throughout that journey. Including the work we do with state government employees, who are obviously very key stakeholders and whom we have a statutory obligation to assist and support as well.

It really is a privilege and we take that responsibility very seriously. I think, I trust, it’s been very evident in the presentations this evening that GESB is providing very good outcomes to you all. Across a suite of outcomes, investment performance, clearly, is very important. But as is our outcomes across a range of measures, including our member servicing, our improvements to our processes, insurance products, our engagement with members, our complaints’ rates, our time to decision on insurance claims et cetera.

I’m very pleased to be able to join the end of the meeting and I may even take some questions. But thank you for accommodating my late arrival.

Brad Zaknich: Thanks Ben. In light of that, there’s a question for Ben. Ben, do I wait for - this from Helouise. Thanks Helouise for your question. I dare say this is the most recent one that’s come through. Do I wait for the changes to put in private contributions?

Ben Palmer: Helouise, thank you for your question. Unfortunately again, you’re going to have to wait a little longer to be able to direct non-government employer contributions to a GESB scheme. That will need to be into the GESB Super scheme. But you can keep all your superannuation insurance with GESB once those changes are implemented.

We have been doing a huge amount of work internally on readiness for these reforms. I think as Jo mentioned earlier, there still needs to be regulations approved. Which can now happen, now that legislation’s been passed. Our timeline is sometime over the next, we’d like to say with a high degree of confidence, around six months that this is implemented. I won’t set specific dates that are subject to things out of our control.

But the passage of the legislation clearly is the key gateway we needed to get through. We will be working hard to get the regulations drafted and approved over the summer. Our systems are all ready to go with our administration systems and our processes. As I said, we’ve been working very hard in the background to be ready for the implementation. Unfortunately, you will have to wait a little bit longer, but with the passage of the legislation, that wait should be relatively brief.

I just wanted to add, these changes facilitate the payment of non-government employer contributions to GESB. Members can, of course, roll in funds and make personal contributions under the existing regime. But certainly in relation to the non-government employer contributions, you’ll have to wait a little bit longer, unfortunately. Thank you for your question.

Brad Zaknich: Thanks Ben. We do have another investments’ question. The question is from David. David asks, would you consider allowing a cash, plus a readymade option to be simultaneously utilised while in the accumulation phase? Similar to what is currently available in the Allocated Pension plan. Paul, that’s for you.

Paul Taylor: Thanks David. That is a very good and reasonable question to ask. It is something that has been asked by members and their representatives in the past, so we are looking at what is required to do that. Again, I don’t want to make any promises or commitments on it, but it certainly is something that is on our runway to look at.

Brad Zaknich: Thanks Paul. We’ve got another question from Bineeta. It says, I have one accumulation account and two retirement accounts. I’m not making any contributions to my accumulation account for at least one year because I’m not longer working. I want to keep it as accumulation for the next couple of years. If I consolidate the two retirement accounts to one as a reversible - I’m assuming that means into one account, will it save account keeping fees and what process will be involved to proceed this?

I can probably answer this one for you. When you have allocated pensions, you actually can’t roll them both together. But what you can do - keeping them separate doesn’t actually incur greater amount of fees because the fees applied to the allocated pensions are a flat percentage. So, whether you got two accounts with X amount, or one account with the same amount in one account, it doesn’t make an awful lot of difference from a fees’ perspective unless they’re invested differently.

If you do want to roll them into one account, you’d need to roll them back into accumulation, and then open another account. This doesn’t incur any additional fees, but it does just take a little bit of time to do so. If you would like to do that, just give the member services team a call, as I mentioned earlier, on 13 43 72 and they can walk you through the process. It’s not difficult, just takes a few weeks to enact.

Another question from David.

Paul Taylor: I think it’s a follow up from the previous one.

Brad Zaknich: It is a follow up. Do we need to ask this?

Ben Palmer: Just to say that David’s question relates to the similar earlier question on a cap of fees for higher account balances. I’ll just add that David makes the comment that some other funds do this and it is much fairer. We very much apply a fair pricing strategy at GESB. We do actually look at the fixed and variable components of the costs that we incur to administer the accounts.

We do believe our system is very fair and it does directly account for - or take into consideration the fixed and variable elements of the administration costs that we actually incur. That said, we do annual pricing reviews and we’re certainly aware that some funds in the market do place a cap on total fees in higher account balances.

The other point I’d make is we look at the fee impost across the entire accumulation phase, or working life of members. It’s not as simple as it may appear. But as I said, in our annual pricing reviews, those type of measures and the underlying fixed and variable cost components are certainly taken into account. We’ll continue to take them into account in future pricing reviews. If appropriate, we may make some changes to our fee structures. But we’ll certainly communicate that well in advance with members. But we take that feedback onboard and it’s something that we are conscious of.

Brad Zaknich: Thanks Ben. We do have another question for Ben as well. I’ll read this one out. There’s been some recent negative press on industry super, in regards to insurance payment timelines or timeliness, I should say. Can you please assure GESB members that we’re not going to hear that GESB are linked with any of this negativity? I hope not. Thank you.

Ben Palmer: That’s a question from David again. A good question and very topical. I don’t have the statistic in front of me, but they are in the - I believe, they’re in the APRA industry statistics in the - I think it was the six months to - or firstly, I want to give you absolute assurance that we are extremely committed to avoiding that type of negativity and headlines, or attention in relation to GESB and our members’ experience.

I’ve said it at previous Annual Members’ Meetings, we - I really, genuinely believe and am of the view that our insurance product settings and claims processes and the way we structure our insurance cover, our terms are both - well, we have a statutory obligation to provide that service and product to all WA public sector employees, regardless of employment category and employment risk status.

I do genuinely think we differentiate at GESB on both our product settings and the manner in which we think through the member implications of both the product settings and our claims’ management process. That’s our philosophy.

I’m extremely pleased to confirm that in the latest data in APRA time to decision statistics - which I think was the six months to the end of calendar year 2023 - GESB had, I believe, it’s the lowest time to decision in the APRA cohort of superannuation funds.

Philosophically, we’re extremely committed to good member experience and outcomes in that area, and certainly in the recent data, these statistics would confirm that we are, at the moment, definitely avoiding that kind of press and negativity. It’s our commitment to ensure that continues to be the case going forward. But our statistics on time to decision, on insurance claims are extremely low by industry standards.

Brad Zaknich: Thanks Ben. We’ve got a question by Annika. Annika’s asked, are GESB invested in live export? This will be over to you, Paul.

Paul Taylor: Sure. The fund does not have an explicit or specific exclusion around the live export industry. Which does mean that, from time to time, we could have exposure.

Brad Zaknich: Easy one. Next question is from Rees, again from Teachers for Climate Australia. What are GESB’s investment managers specifically asking of Woodside and Santos in their engagement with these two companies? I’ll hand this over to you, Paul.

Paul Taylor: Sure. I could probably take the rest of the session answering this, because there is a lot they obviously engage with them on. But certainly, one of the key aspects and if - I guess given where the question’s come from - certainly around their net zero commitment and their reliability and the credibility of those. There is a lot of engagement that our investment managers do undertake with both management and the Board from Woodside and Santos on these matters.

But I can certainly follow up with a lot more detail as well by responding to this question after the - when we formally provide a written answer after this event with a bit more. Because it is quite an extensive process that we can summarise as part of that process.

Brad Zaknich: Thanks again, Paul. Just wait for the next question to come up from Robert. Hi, I’m concerned, as lots of people - as a lot of people are that my superannuation - before COVID, I was gaining more than enough to cover my monthly payments. During COVID, I lost over $100,000. Now the COVID scare is over, I barely make anything at all. Why is that? Is there any way to improve the interest? This one for you again, Paul?

Paul Taylor: Sure. Thanks Robert. You are correct that returns pre-COVID were very strong and when COVID did hit, that there was a sharp decline in investment markets, which obviously flows through to account balances. But also, there was a very sharp bounce back afterwards.

Looking at very long-term returns over that entire period - now, would depend on what investment plan you happen to be invested in - but over that long-term, has - those plans have generally met those investment objectives of exceeding inflation by a certain margin. But again, depending on the exact plan that you are in. But certainly, that long-term view that our returns have been strong.

I don’t know your personal circumstances, so I’m not wanting to give - or I’m not giving any advice in that respect. But you do mention about covering monthly payments, so I am going to make an assumption you’re in the retirement phase.

There’s a couple of things I’d mention is that, if you’re saying that before COVID, you were getting good returns and afterwards maybe not so, I mean it is possible whether you’ve made an investment switch, for example, because as I said, growth orientated plans in particular, were doing strong beforehand and afterwards. But if you’ve switched to a more conservative plan on the onset of COVID - which a lot of our members did - then that could lead to having those lower returns because share markets have done extremely well over the last few years.

Again, just trying to pick up in the question - and again, hopefully I’m picking it up correctly - but if it is the case where you’re still making - your account balance is still holding up, even by a little bit, after your monthly pension payments, then it’s certainly a positive case, if your returns are still holding up in that respect.

To address the question, is there any way of improving returns? Probably the key thing I’d emphasise is there is always a trade-off between risk and return. You could seek higher long-term returns with a more growth orientated strategy, but certainly the journey along the way won’t be smooth. If you’re investing in more share markets and growth orientated strategies, then it could be years where your account balance declines quite materially.

Equally, your account balance could rise quite materially in any particular year, whereas in the long-term, it might be okay. But there’s a lot of variability. Similarly if you had a - if you invested in a conservative plan or a cash plan or something like that, then maybe your long-term returns might not be as strong. But you’d get a lot smoother journey along the way.

Unfortunately, there’s no free lunch. If you do want higher long-term returns, or certainly expect to get higher long-term returns, then that generally involves taking a little bit more risk. So, just getting that right balance. Certainly, as we mentioned before, we want you to enjoy a quality retirement and not concerned - a concerned retirement. If you are having concerns, we certainly encourage you to seek advice in order to help you determine - if you need help to determine what the level of risk and return you are targeting.

Brad Zaknich: That was actually the last question for the evening. Without too much further ado, I’d like to thank you all for both attending and for those who participated in the evening’s events. The recording of tonight’s event will be posted on the GESB website in the coming month or so, along with any reinforcements of the questions that we answered earlier.

On behalf of GESB, I’d like to thank you so much for logging in and attending tonight’s presentation. Thank you so much. Have a pleasant evening.

End of Transcript