2021 Annual Member Meeting transcript

Start of transcript

Tricia Bailly: Welcome, everybody. Thank you for joining us this evening. My name is Tricia Bailly. In my role as Key Account Manager at GESB, I am responsible for member education and employer relationship management. So, I may have had the pleasure of meeting some of you in my educational seminars. I have had 25 years of diverse experience in financial services industry, including 10 years of employer and member relationship management for corporate and industry super funds. It is my real pleasure to be your MC this evening and I welcome you all to GESB’s very first Annual Member Meeting in which we will be covering the 2020/2021 financial year.

I’d like to begin by acknowledging Aboriginal and Torres Strait Islander people as the first inhabitants of this country. I have had the pleasure of living and working on Whadjuk Noongar country for the past 23 years. My role has provided the unique opportunity for me to engage with Aboriginal people across Western Australia, which has allowed me to gain a greater appreciation and insight into their culture, traditions and importantly, their ancient connections to this land. I pay my respects to the Traditional Owners and Elders, past and present, of all lands on which we come together, and on behalf of GESB extend that respect to Aboriginal and Torres Strait Islander peoples, including our colleagues and members.

Managing the retirement savings of over 240,000 members makes it challenging to gather everyone in one location, so we’re allowing technology to do the hard work. Another benefit of facilitating this online is that it makes it easier to include all our members who live and work in all the regions of Western Australia. I’d like to acknowledge our Board members in attendance this evening, member representatives Anne Gisborne, Bruce Hawkins and Naomi McCrae and employer representatives Virginia Christie, Catherine Nance, and Frank Sciarrone. I’d also like to extend a warm welcome to our new Chair, Jo Gaines, who has joined the GESB Board in late October.

Jo has extensive experience as a leader and strategic policy director, operating at the highest level of government in Western Australia. I now would like to hand over to Jo to say a few words.

Jo Gaines: Good evening. My name is Jo Gaines and I’ve recently been appointed as Chair of the GESB Board. Firstly, on behalf of the Board, GESB staff and our members, I would like to thank John Langoulant for his outstanding stewardship of GESB over the past 11 years. He’s led the fund through the ups and downs of the aftermath of the financial crisis and more recent COVID-19 pandemic and leaves it in a strong position, achieving benchmark investment returns with efficient and effective operations. I’m very honoured to be appointed as the chair of GESB. I’ve spent my working life representing the interest of public sector employees in Western Australia through my association with CPSU/CSA and the State Government. And I’m excited to have the opportunity to continue to represent the interest of WA public sector employees in my new role.

GESB has a critical role to play in supporting a well-deserved quality retirement for people who spent their working life supporting the WA community. It has an exciting future and I look forward to working with other Board members and the Executive team as we steer the organisation through the significant changes happening in the superannuation industry in coming years. I also look forward to delivering my report on our performance and continue to deliver positive outcomes to you at next year’s annual member’s meeting. I’ll now hand back to Tricia.

Tricia Bailly: Thank you, Jo, for affirming your commitment to GESB and our members. We’re excited for you to bring your unique talents, expertise, and perspective to our organisation. Now, before we get started, I’d like to thank David Knox, our Actuary from Mercer, Patrick from the Office of the Auditor General, and Michael Hoang from EY, our external auditor last year, for attending. I’d also like to acknowledge our Executive Management Group in attendance this evening.

Some simple housekeeping before we begin. If you have a question, please ask a question – please use the ask a question function to submit your question. You can find this at the top righthand of your screen and in the footer on the left-hand side.

We’ll have a Q&A session at the end and aim to get through as many questions as we can. Any question that we can’t answer tonight will be available online soon along with the minutes from this meeting and a recording of this session. We’ll prioritise questions that may be of benefit to the majority of our members. If you have a specific question related to your account, we would encourage you to get in touch with us. You can do this through our Member Services team or our online chat service.

As you may be aware, we are not licensed to provide personal financial advice. Please know that the information in this presentation is general in nature and not intended as legal, taxation or personal financial advice. We always encourage our members to consult a suitably qualified financial advisor who can take your personal circumstances into account.

Tonight, we’re going to hear from one of our Board Directors, our CEO, and our General Manager of Investments. These presentations have been pre-recorded, but everyone you’ll hear from tonight is currently online, so you’ll have an opportunity to engage with them directly towards the end of this meeting.

Our first speaker tonight has been on our Board for more than five years. He has considerable experience in the investment and wealth management industries and as a trustee director of both private and public sector super funds. He is currently the Managing Director of Vantage Wealth Management, Chair of the Fire and Emergency Services Superannuation Board and Chair of 12 Buckets, a charity which provides mentoring for primary school children in Western Australia. Tonight, he’ll be providing an overview of the past financial year for our GESB members. Here is a message from Frank.

Frank Sciarrone: Thank you to everyone for attending this online event. I would firstly like to say thank you to Tricia Bailly, our Key Account Manager at GESB, for being our MC. I’d also like to acknowledge my fellow Board members and GESB colleagues, including our CEO, Ben Palmer, and our General Manager of Investments, Paul Taylor, both of whom you will be hearing from shortly.

As Tricia mentioned, I’m a member of the GESB Board. I’ve been serving as a director since February 2016, and as you know, the world has seen an incredible amount of change over this time. In these past two years in particular the ongoing impacts of COVID-19 have been felt across the globe, including here in Australia. And of course, they have in one way, shape or form impacted all of our lives. When we experience these life-changing global events and fluctuating economic conditions, you as our members rely on us to stay the course and make well-thought out decisions in relation to your super savings. You can also rely on us to support you in making informed decisions about your retirement savings during uncertain times.

As the largest super fund in WA and one of the largest super funds in Australia, we take our responsibility to you seriously. GESB’s sole purpose is to manage superannuation on behalf of current and former WA public sector employees and their spouses. We aim to put you, our members, first in everything we do and advocate for you when it comes to matters relating to your super. We take pride in delivering services to our members and State Government employers efficiently and effectively.

You may be aware that GESB is constituted under Western Australian State laws. We very much operate within the WA public sector, for the WA public sector. We are accountable to the State Government and GESB’s responsible minister, the Treasurer of Western Australia.

The staff and Executive Management Group at GESB are your public sector colleagues and are genuinely aligned with ensuring we achieve the best outcomes for you. The Board’s responsibility for overseeing the strategic direction and management of GESB’s operations includes our global investment portfolio. This portfolio currently stands at over $35 billion dollars. This evening you’ll hear from Paul Taylor, our General Manager of Investments. Paul will be discussing the investment environment and our investment performance over the past financial year. Pleasingly, our investment plans produced strong returns against the backdrop of the COVID-19 pandemic.

An area that has grown significantly in importance in recent years is the management of climate change-related risks and broader environmental, social, and governance, or ESG factors. Again, Paul will go into greater detail on this topic, however, I am pleased to advise that in June 2021 your Board made a commitment to transitioning our investment portfolio to net zero carbon emissions by 2050. This is consistent with the goals of the Paris Agreement and in line with Western Australian Climate Change Policy. Importantly, the Board has taken this decision as it believes it is in the best financial interest of members to do so.

Delivering benefits and excellent service to our members is at the centre of everything that we do. As a member, you may already be aware of our annual member outcomes assessment. We have used the findings from this work to help shape our strategic decisions and focus on how we can deliver ongoing value to you, our members. If you’d like to read our member outcomes assessment, it’s available on our website - we’ll provide you with a link at the end of this meeting.

I’d like to take a moment to touch on corporate governance. As Chair of the Audit and Risk Committee, I take the Board’s responsibility to ensure GESB fulfils its statutory, regulatory, and fiduciary requirements very seriously. The Board operates within a robust corporate governance policy framework. This framework incorporates legislative and regulatory requirements aligned to the industry best practice and the Australian Securities Exchange governance principles. Importantly, it reflects GESB’s operating environment as a State Authority within the financial services market. This means that we have very rigorous external and internal audit programs. The Office of the Auditor General conducts our external audits, and I’m pleased to advise that GESB received an unqualified 30 June 2021 audit opinion, which means our financial statements present our affairs fairly in all material aspects. I also note that this has been the case for the past 15 years, and for the past seven years GESB has been consistently voted in the top 20 best practice agencies by the Office of the Auditor General.

In addition to our external audit, the Board, through the Audit and Risk committee, oversees an annual comprehensive audit program to review and test the controls and oversight measures GESB has implemented to, among other things, manage our outsourced service providers. Last year this program was conducted by KPMG and is just another measure that is designed to ensure members’ best interest are always at the forefront of what we do.

An area that the Board maintains a keen interest in is complaints. We believe that complaints are like the canary in the mine. They provide insights into the pain points members experience when dealing with GESB. As a Board, we regularly review emerging trends and work with management on strategies to improve members’ experience.

Before I pass back to Tricia, I’d like to take this opportunity to thank all members of our Board, Audit and Risk Committee and Investment Committee for their dedicated work during the year. It’s been a year dotted with virtual meetings, last-minute changes, and adapting to mask wearing requirements. Thank you to our team of over 60 GESB employees who work tirelessly to meet your needs. The team has continued to work collaboratively with our key outsourced providers and WA public sector agencies. It’s been a challenging year and they have worked hard to ensure our high service standards have been maintained.

On behalf of the GESB Board, I would like to thank all of our members, and especially those of you who have taken the time to attend this inaugural annual member meeting. I hope you find it a useful and informative experience. And finally, I wish to affirm to you the Board’s commitment to strong governance and robust stewardship of your superannuation savings. Thank you.

Tricia Bailly: Thank you, Frank, for your presentation. I’m sure our members will agree there was a lot of valuable information shared. Next, we’ll hear from our Chief Executive Officer. He’s responsible for leading our organisation and is accountable for achieving our strategic, business, policy and budget objectives. He will be guiding us through GESB’s commitment to delivering the best outcomes for our members and some of the specific development, changes, and initiatives you may have seen firsthand. Here is our CEO, Ben Palmer.

Ben Palmer: Welcome, everybody, and thank you for attending our first Annual Member Meeting. I’m Ben Palmer, Chief Executive Officer at GESB. As you may know, we’ve been managing current and former WA public sector employees’ retirement savings for over 80 years. Over that time, we’ve been through a lot of ups and downs and there’s no doubt that COVID-19 is one of the biggest impacts we’ve seen on our financial and social environments. It has changed the way we live and work and creates ongoing uncertainty for economies, for investment markets, and for society as a whole. I’m proud to let you know that despite these significant challenges and high levels of uncertainty, our team, including our outsourced providers, has successfully managed to deliver positive investment returns and high-quality services throughout the 2020/21 financial year.

And while we celebrate our successes during this time, we know that there are some things that we can do better. I’m going to provide you with an overview of some of the improvements we’ve made for members over the past year and what we’re aiming to achieve in the future.

At GESB, we’ve set our strategic focus on four key areas to ensure we deliver excellent outcomes to you, our members, and to the State of Western Australia. Our first focus is on financial outcomes for you by delivering returns that meet or exceed investment objectives. Our General Manager of Investments, Paul Taylor, will provide more detailed information on our investment performance and process in his presentation. I’ll just say that 2020/21 was a very strong year for investment performance.

We believe in full transparency around our investments. As an example of this, in October 2020 we published our full portfolio holdings on our website, despite this requirement for Commonwealth-regulated Superannuation funds being deferred until December ‘21. The other side of the equation in terms of delivering financial outcomes to you is through our approach to the fees we charge. We want to make sure we’re managing your super as efficiently as possible, which means our fees sit amongst the lowest of all super funds. This can make a big difference to your retirement benefits over the years your super is invested with us. Our Board approved fee reductions during the 2020/21 financial year for the GESB Super Scheme, which came into effect 1 October 2021.

Our second area of focus is about providing you with a positive experience when you engage with us. We want to make sure we provide services and information to help you make informed decisions about your retirement and super. As part of this, we want every interaction you have with us to be as positive and straightforward as possible.

Our Member Services Centre, which is run by Link, handled approximately 13,000 inbound calls, almost 1,000 online queries and processed more than 8,500 transactions per month, on average, in 2020 and ’21. Our surveys have shown that over 90% of our members were satisfied with the service we provided during the year. We understand that you value being able to speak to a person when you call, and you appreciate that they’re based right here in WA. It’s also important that your queries are answered or resolved the first time you call, or if not, that you can speak to the same person. In 2020/21 over 80% of calls were resolved in the first call or by the person first spoken to. We’re proud of the high level of satisfaction you have when you contact us, but we always want to know how we can do better. We constantly review your feedback to find ways to improve through member surveys, complaints, and other feedback channels, and we encourage you to continue to provide that feedback.

Of course, not everything runs smoothly all of the time. Last year we received around 300 complaints from members, a figure which represents just over 0.1% of our member accounts. During the year, we introduced a new complaints management system that provides us with deeper insights into the pain points you might have and how we can address these.

The very nature of our industry means that there can be complex and stressful circumstances and issues that you might need help to deal with. We want to make sure you’re always treated fairly and that your requests are handled in a timely and respectful manner. In the past financial year, we introduced a number of improvements that meant interacting with us during those more difficult times was a better experience. An example of this is the improvements we’ve made to our compassionate grounds release of funds application process. We’ll continue to identify further improvements, and your feedback is important to help us do this. We’re also fully committed to helping address the unique needs and barriers that can be experienced by Aboriginal and Torres Strait Islander members.

Last year we launched our ‘Innovate’ Reconciliation Action Plan. This plan outlines how we’ll continue developing and strengthening relationships with key Aboriginal and Torres Strait Islander organisations and create targeted superannuation education programs, work experience, and employment opportunities. Some initiatives from the past financial year include partnering with the Wunan Foundation to deliver resources to regional Aboriginal and Torres Strait Islander students. We also participated in the Financial Counsellors’ Association of WA’s Kimberly Forum in Broom to provide financial counsellors with relevant information to support our members who live in the region, many of whom are Aboriginal and Torres Strait Islander people.

We also take part in WA public sector initiatives, including our Disability access and inclusion plan and our Multicultural access plan. These plans support our ongoing commitment to providing accessible and inclusive services and information to all our members. We arrange accessibility audits for our online tools and information to make sure these meet or exceed accessibility standards. We’re pleased that both our website and our new online investment choice tool received a 100% rating against global web content accessibility guidelines. We’re also focused on improving our processes and systems to make it easier for you to interact with us using a range of channels. I’m happy to let you know that in 2022 we’re planning to launch our new Member Online portal. This aims to help you have a better online experience so you can manage your account and interact with us easily online. Once this is in place, we plan to move our forms and other communications into the portal.

Our third focus area is ensuring that we provide value for money products and services and deliver outcomes to you in an efficient way. We do this in partnership with our outsourced providers, in particular, the Link Group. Link and GESB share a member first focus and the Link team has a historical understanding of GESB’s unique schemes. One example of how we’ve been focused on providing you with efficient services is through the COVID-19 Early Release Scheme which ended in December 2020. Over the full period of this scheme, we paid more than 19,000 early release payments totalling more than $164 million dollars and the average payment time was three and a half business days. We’re committed to providing specialised, cost-effective insurance that members can rely on and that doesn’t inappropriately eat into your retirement benefits.

On average, our insurance costs less than 1% of lifetime salaries. Our insurance claim payment rate with 96% for total and permanent disability claims, 99% for death claims, and 99% for salary continuous insurance claims last year. In 2020/21 we introduced Special Conditions Cover for over 24,000 members who were initially employed as casual, but who became non-casual at a later date with their same employer. This new type of insurance cover was introduced as a direct result of feedback from our members. We also extended insurance cover from age 65 to 67 to better align with the Age Pension. In addition, we made some changes to insurance categories for vocational teachers.

Our first Member outcomes assessment was published in March 2021. This assessment has been adopted by the Board to improve accountability and visibility to members. Pleasingly, it demonstrated that our operating expenses are well below industry averages. Independent agency SuperRatings awarded our GESB Super, West State Super, and Retirement Income Pension products a platinum rating for the 14th consecutive year, recognising GESB as a top value for money fund.

The fourth and final area of focus is on our people and relationships. Creating a positive culture for our team responsible for investing, managing, and communicating with you about your super is very important. We want a safe, supportive, and ethical culture driven by good leaders and strong values, both internally and in our outsourced providers. Our staff satisfaction rate was 81% in 2021, and I’d like to let you know that we remain committed to maintaining a positive culture and environment for all staff.

As we move through this current financial year, I’m confident that GESB will continue to deliver on our key outcomes and provide you with high quality products and services. You place a high level of trust in us to look after your retirement savings, and this is a responsibility we take very seriously.

After reflecting on the past financial year, we’ll continue to listen to and understand your needs as current and former public sector employees, and work to deliver high quality outcomes for you, our members. The 2021/22 financial year will see substantial reforms implemented for Commonwealth-regulated superannuation funds. As a State-regulated fund, we will work with the State Government and key stakeholders to inform the State’s response to these reforms. Thank you for taking the time to attend this meeting and I look forward to answering any questions you may have at the end of the presentations.

Tricia Bailly: Thank you for your presentation, Ben. I’m sure our members were pleased to hear about the ways GESB is working to deliver better outcomes for all our members. Our final presentation this evening is from someone with more than 20 years of investment experience with super funds and other institutional investors. This includes being the head of asset management consulting at a large global investment firm, head of investment management research at an investment firm in London, and director of the institutional investment team at a global financial services organisation. At one point he was the matchday statistician at the Australian Football League games in Perth. I think it’s safe to say he’s had an interesting and varied career. Here is our General Manager of Investments, Paul Taylor.

Paul Taylor: Thank you, Tricia. As introduced, I’m Paul Taylor and I’ve been leading our investment team at GESB since 2019. That includes responsibility for our investment governance, strategy, monitoring, asset allocation, investment manager selection, and portfolio construction. I want to start by highlighting what is unique to the way we invest at GESB. We're the default fund for the WA public sector and a Government Trading Enterprise, which is significant for two reasons. First of all, it means that we’re solely focussed on achieving outcomes for our beneficiaries, not to make profit for shareholders. Secondly, there are members of the Board, Executive Management Group, and staff, including myself, that have super invested alongside yours, therefore our interests are well aligned, and we ride the ups and downs with you.

This evening I’ll be guiding you through some of the key investment highlights from the past financial year. I’ll show you how the various plans have performed over the year and longer term and give you an overview of where your super is invested. I’ll also touch on ESG, which are the environmental, social, and governance factors that can impact investments. Finally, I’ll provide some insights into current market conditions and what this may mean for the outlook going forward.

It's certainly been an interesting year in investment markets. As we’ve heard tonight, the impacts of COVID-19 have created a tough environment for investment with a lot of uncertainty. However, I’m pleased to let you know that despite this, it has been a very strong year for investment markets. This graph shows the historical investment market return for major asset classes over 2020/21 financial year. As you can see, returns have generally been good over the past one and three years. For the 2020/21 financial year, Australian and international shares have gained almost 28% with a number of major share markets hitting all-time highs. The positive returns have been due to a combination of factors, including the massive government spending that has taken place to support economies and the approach of central banks who have cut official interest rates to close to 0%.

In addition, the production and distribution of COVID-19 vaccines also helped many global economies recover. Returns from cash and bond investments were neutral over the year due to the low interest rate environment. Inflation expectations will be key in determining how long the interest rate stay this low.

So, what does this mean for your retirement savings? This graph shows an overview of many of our investment plans. As you can see, we’ve seen strong returns from Readymade plans over the past financial year. Looking at the My GESB Super plan, the second green bar from the top, you’ll see it returned around 17.3% for the year, which was 1.6% above its benchmark return - the benchmark being the return that would’ve been achieved if returns were in line with markets. The My West State Super Plan also returned 17.3% for the year, which is 1.4% above its benchmark return.

These returns are the highest annual returns we’ve seen since the commencement of these plans - which was 2007 for GESB Super and 2001 for West State Super. For more conservative plans, returns were around 8%, which were about 1% above benchmark. The strong returns from share markets over the past one and three years were the main reasons we saw such positive results. As an update, performance since 30 June has been reasonably good. My GESB Super and My West State Super have achieved returns in the order of 2% to 2.5% net of tax and fees for the period 1 July 2021 to 31 October 2021, while returns from conservative plans have been in the order of 0.5% to 1% over the same period.

Now to look at our long-term objectives. This graph shows some of our planned returns against primary benchmarks. These are measured over rolling seven-year periods for My West State Super, My GESB Super and Retirement Income Balance plans and rolling five-year periods for conservative plans. The relatively flat dark blue line shows the objectives, which is CPI plus 3% per annum for the most recent period for more growth-orientated plans, and CPI plus 2% per annum for conservative plans. As you can see, performance can fluctuate from year to year, but most of the time objectives have been achieved, which is consistent with our expectations.

Whilst long-term performance has been strong, we are not complacent. The most recent review of our strategic asset allocations resulted in some small changes in our long-term positioning. This is shown on the slide using My GESB Super as an example. First and foremost, the chart shows that investments are very well diversified across a range of asset classes including shares, property, infrastructure, cash, and bonds. However, we recently increased our long-term target exposure to infrastructure investments and reduced our exposure to bond investments. We believe this slight change will better align portfolios to achieve the risk and return objectives on a forward-looking basis. These changes were not large, which reflects the long-term approach we take to managing your investments. For the asset allocations of our other plans, please visit our website.

Now I’ll drill further into each asset class. For all asset classes we construct diversified portfolios in a risk and cost controlled way. Money is primarily invested on your behalf by professional investment managers within the constraints and objectives set by GESB. We use a combination of different managers across asset classes and for different strategies. These include low-cost index tracking or passive management, which are investments that aims to achieve returns in line with the market and active management, those that try to achieve returns above the market, but incur higher costs. Cash is the only asset class where GESB manages assets directly, and this is to allow us to access better term deposit rates with institutions as a direct depositor.

One area I’d like to focus on is how we integrate environmental, social and governance, or ESG, factors into our investment decisions. This includes considering the physical and transitional risk of climate change to ensure that we are appropriately managing risk and responsibly investing the money of our members and the State. I want to highlight that we integrate these factors with the aim of improving financial outcomes. We aren’t looking to avoid all ESG risks, but to ensure that we’re adequately compensated for them, just like other investment risk that we’re exposed to. We view managing ESG risks and achieving better financial outcomes as going hand in hand.

There are five ways we do this. Firstly, through investment strategy, by undertaking scenario analysis of potential climate change scenarios. Secondly, portfolio construction, by measuring our carbon emissions and ESG scores of our equity portfolios. Thirdly, through investment manager selection and monitoring, by understanding and monitoring how external investment managers integrate the management of ESG risks into their investment process. Fourthly, through company engagement, by our external investment managers undertaking proxy voting and meeting with company management and Boards on our behalf. Finally, engagement with our asset consultants, by requiring our investment advisers to integrate ESG considerations into their investment process.

In considering climate change in the context of these factors, earlier this year the GESB Board committed to transitioning investment portfolio to 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. In our view, this aligns with achieving better financial outcomes and assists in managing the financial impacts of climate change. We are relatively early on in this journey, and we expect this to continue to evolve over the coming months and years while staying true to the philosophy of improved financial outcomes. If you’d like to learn more about our approach, I encourage you to take a look at our responsible investing page within the investment and performance section of our website - we’ll provide a link for you at the end of this meeting.

So where to from here? We’ve just come off a very strong year of investment performance across many asset classes. So, what does the future look like? Unfortunately, I don’t have a crystal ball, but I can say what we know about the current market environment and where we see it going in the medium term. What we know is that cash returns are exceptionally low, in fact, close to zero. This is expected to be the case in the next year or two. At its November 2021 meeting, the Reserve Bank of Australia noted that it would not increase the cash rate until actual inflation is sustainably within the 2% to 3% target range and this is expected to take some time. So, cash returns are expected to be low in the near term.

Bond yields are also low. A 10-year Australian government bond was yielding around 2% per annum as at 31 October 2021. This can be thought of as lending money to the Australian government and then giving you around 2% per annum interest over a 10-year period. So, returns on bonds are not expected to be high either. What’s more, share markets are expected to remain volatile and future outcomes depend on how quickly economies recover and adapt to a new normal. These all suggest low returns over the next three to five years compared to what we have experienced in the past three to five.

But before you think it’s all doom and gloom, there are positives. Inflation in Australia is currently low. That is, whilst future returns could be lower than recent history, the relatively low inflation means that what you can buy with your money is relatively stable. The future path of inflation is likely to be a significant factor as to the performance of investment markets going forward. There are signs that inflation is increasing, but if inflation remains contained, then lower returns on investments can still provide returns that grow the purchasing power of your savings.

Corporate earnings are expected to continue to improve. As previously discussed, stimulus measures have been helping many parts of the economy which can be positive to investment returns.

Finally, there does appear to be light at the end of the tunnel with COVID-19 vaccination rates. Whilst there will be risks of COVID-19 variants and uncertainty around the post lockdown world will look like, history has shown that economies and investment markets have bounced back after downturns, whether they be pandemics, wars, terrorist attacks, or recessions. In weighing up all of these factors, we’re currently neutral versus our long-term strategic targets. What this means is that we are currently managing the portfolio in line with the Strategic Asset Allocations.

On that note, it has been a pleasure to provide this update and I hope you found it worthwhile. I would be pleased to address any questions you may have. Thank you.

Tricia Bailly: Thank you, Paul. It really has been a time of uncertainty. So, it’s definitely reassuring to see those performance figures from the past financial year. Now it’s time for some question and answers. If you have a question which you haven’t already submitted, please use the ask a question function now. I’ll begin by reading some questions we have received from members prior to the commencement of the meeting and directing them to the most appropriate person on our panel to respond. We will endeavour to respond to as many as we can. Please note there may be some questions we are not able to answer during this meeting because of time constraints or having certain information available. We will, however, respond to all of your questions you ask. These questions will be made available on our GESB website, together with the minutes of this meeting.

Just a reminder, we’ll be prioritising general questions where the information could be of benefit to a number of our members. For specific questions relating to your account with us, we encourage you to get in touch with our member services team. This can be done through our online chat, or our Perth based call centre.

The first question we have is for our Director, Frank. This is a question I often get asked when I’m out in the workplace by members, so it’s very relevant. Frank, there seems to be constant change to the superannuation rules. Is super still a good way to save for retirement?

Frank Sciarrone: Tricia, you’re absolutely right, this is a question that many people ask over and over again. If you look at the number of changes that have been made to superannuation over the last 15 or so years, some of those have been good, but certainly in the most recent [circumstances], good and bad. Certainly, most recently there’s been many, many good changes to superannuation. Many of the recent changes have been made to improve retirement solutions and retirement outcomes and to give members greater insights into how their super is performing. Some of the things more recently that have been introduced have been things like the downsizer contribution, the first-time buyer savings program and more recently increases to superannuation contribution caps, which are all very positive changes to superannuation.

Our CEO, Ben Palmer, mentioned member outcomes legislation which require super funds to prepare an easy-to-read fact sheet. That fact sheet details investment performance, fees and insurance and it provides a commentary on whether the fund is actually meeting these targets. So, that’s all very useful information for members, and also provides commentary on any improvements that will be made to members’ benefits. There’s no doubt that superannuation is still a preferred method for savings. Super earnings and super contribution rates continue to be taxed at a lower rate than income tax rates and I think that’s one of the most attractive features for people when investing in superannuation and particularly in the pension phase when all those tax rates drop down to zero.

Salary sacrificing under those tax regimes can be a very effective way to increase retirement benefits and for eligible members the Commonwealth Government’s low-income super tax offset is a payment to help low-income earners save for retirement. So, when you bundle all those things together, superannuation is still a very good way to save for your retirement.

Tricia Bailly: Thank you, Frank. We have another question here. This question is for Ben and Patrick has asked this question. There have been a lot of media reports about insurance in super. What insurance does GESB provide members?

Ben Palmer: Thanks, Tricia. So, insurance within the superannuation environment is a very effective and efficient way to ensure that you and your family do have a degree of financial protection should you suffer from injury or illness, become totally and permanently disabled, or pass away. If you’re a member of the GESB Super or West State Super schemes, you may have one or more of three types of insurance cover: Death cover, Total and Permanent Disablement cover, or what we call Salary Continuance Insurance, or sometimes referred to as income protection cover. These are provided through your superannuation account in those schemes and the insurance premiums for that cover are deducted directly from your GESB Super or your West State Super account.

So, in terms of the types of cover, Death cover obviously, clearly provides a benefit in the event of your death and that’s a one-off lump-sum benefit that includes a terminal illness benefit if you unfortunately have a terminal diagnosis. Total and Permanent Disablement cover, again, as the name suggests, if you become totally and permanently disabled, that’s also a lump-sum one-off type payment of cover. If you’re in the GESB Super or West State Super schemes you may have those types of cover. Default cover is issued up to a level of $200,000 as a lump sum. That can vary depending on your age.

The other type of insurance is, as I said, Salary Continuance Insurance, and that’s a monthly benefit that is paid to you as a monthly income stream in the event that you can’t work due to illness or injury. The benefit amount there, again, the default cover is 75% of your pre-disability income up to a maximum of $4,200 per month. And that again, can depend on the number of hours per week you work in terms of your FTE ratio. That also may include a Superannuation Top-up Benefit such that if you don’t receive the full benefit there may be an amount that’s actually paid into your superannuation account for later benefit to you.

Of course, the levels I’ve spoken about are the default levels and you can, of course change your level of cover at any time. You can increase or decrease the level of cover, you can opt out of cover, you can fix the amount of cover, so it doesn’t change automatically with your age. Another thing you can change also is the waiting period for your salary continuance insurance. You can adjust the amount of time you wait before that benefit commences, taking into account other entitlements you may have like sick leave, for example. I think I failed to mention earlier that the benefit period of the default cover for salary continuance insurance is a two-year benefit period.

So, they’re the types of insurance that we offer through the GESB Super and West State Super schemes.

Tricia Bailly: Thank you, Ben. That was a very comprehensive answer there. The next question is for Paul. And Patience has posed this question for Paul to answer. So, the question is, as an organisation that invests large sums of money on behalf of members, what are you doing to address climate change? Very good question. Thank you, Patience.

Paul Taylor: Thank you very much for the question. So, in managing our portfolios, and I did touch on it on the earlier presentation, is that we focus on ensuring that we manage all the key risk, including environmental, social and governance risk and opportunities, which includes climate change. As part of that we also ensure that we operate within the best financial interest of members. That’s a really important and noteworthy distinction. We don’t see this as conflicting objectives; we see the identification of risk and opportunities within climate change and environmental and social and governance more broadly to be entirely in line with getting better financial outcomes on behalf of our members.

I did touch on how we do that a little bit through looking at our investment strategies. So, when we are deciding the asset allocation, looking at various scenario tests for climate change. When we’re selecting investment managers, when we are constructing portfolios, when we’re engaging with the companies that we invest in, or more accurately our investment managers engage with companies on your behalf, and also the appointment of our consultants. Culminating that all together, it has been mentioned that we have committed to transitioning the investment portfolio to net zero carbon emissions by 2050. We’ve also as part of that commenced a transition plan with interim targets in place, for example, within our listed equities portfolio aiming for 35% reduction in carbon emissions by 2030 and that’s off a 2020 baseline.

I’d also like to highlight that this isn’t about selling assets at any price based on one particular measure, whether that’s at a climate change measure or any other economic measure. This is really about considered reduction in our carbon emissions in order to achieve strong investment outcomes and achieve our climate change commitments as well. Finally, I would like to highlight that this really is an important strategic matter for all of GESB, from the Board down and we do have a lot of things in the pipeline, and we do look forward to sharing those with our members once they are rolled out.

Tricia Bailly: Thank you, Paul. There has been a lot of discussion in the media about that particular topic there. Charles has asked a question and I’m going to direct this question to Paul again. Why doesn’t GESB offer a sustainable investment option? I often get this question, again, when I’m out talking to members in the workplace.

Paul Taylor: Thanks for the question. So, I’ll just touch on three points to address this question. The first is, and I mentioned it previously, that we think it’s really important that ESG considerations, or sustainability considerations are integrated across the entire portfolio. We think that’s prudent management, we think it is in the best financial interest of our members. Even from an impact perspective, making decisions on behalf of $35 billion and instigating change that way is a lot more impactful than if we had just an option which is a small subset of that amount.

The second point I want to raise is that we have had an ESG option, sustainable option in the past. It did have a very low take-up from members. Obviously, having more investment options does require greater cost, greater resources be put into it and where there is very little impact, or take-up by members, a decision was made some time ago to close that particular option.

Finally, though, and probably more importantly than those other two options, is that we do acknowledge the increased demand and interest in these particular questions. Tricia has obviously mentioned her time on the road what – the questions are received and obviously getting the question again tonight, we do have an ESG roadmap, or we set an agenda to cover ESG matters and the like. For some time, it is on that roadmap for review in 2022 and it’s been there as part of that process. 2022 is fast approaching and it’s certainly the intention to commence looking at that in line with that long-term strategic plan and to look at it in 2022 to consider whether there is sufficient interest to launch such an option.

Tricia Bailly: Thank you, Paul. Beth has posed a question. Again, sorry, Paul again, is very popular this evening. Are you invested in Evergrande and what are you doing to protect our money from such events?

Paul Taylor: Thank you again. So, Evergrande for those who aren’t aware, is a Chinese property developer who has got into a bit of strive in terms of being able to pay some of its debts. The exposure that the fund has – we do have an exposure of 0.0001%, obviously a very small exposure. That is via – I did mention it before, that we had passive exposure. So, investments are made in accordance with a broad index to closely follow that index tracking exposure. Hence, it’s a small part of the index and it was an extremely small part of the portfolio. What are we doing to protect money? One of the key mechanisms that protects against such events is the diversification of our portfolios. Whether that be looking at the individual asset class level or whether it’s looking at a broader portfolio if you are in a readymade plan.

I did show earlier how diverse the holdings actually are. So, what we do aim for, whether it’s a specific event at a company, whether it’s a specific economic event that comes through, or whether it’s some particular industry which faces hardship, that any one, particularly one of those events, won’t have an outsize impact on the portfolio. So, really it’s that diversification that really shines through. Also, just highlighting as well, we have for our assets appointed professional investment managers that we do monitor very closely. It’s their role to ensure they are on top of these issues and to position the portfolio accordingly.

Tricia Bailly: Thank you, Paul. We’ve got some great questions coming through tonight. Barbara has asked a question and I’m going to direct this question to Frank. What is GESB doing to promote Indigenous engagement and reconciliation? I’d like to hear the response to that, Frank.

Frank Sciarrone: Thanks, Tricia. When it comes to this question, I would say that over the past five years that I’ve been sitting on this Board, I’ve been particularly pleased at the commitment of not just the GESB Board but the GESB executive and the GESB staff and their passion towards Indigenous engagement and reconciliation. It’s really been quite uplifting. There’s no doubt that our Indigenous members and Torres Strait members face unique challenges and that their superannuation outcomes have been below average. So, what’s GESB doing in relation to trying to deal with that? There’s been a great deal of consultation with the Aboriginal and Torres Strait Islander people and the organisations that support regional communities around Western Australia.

There’s been four main factors which we’ve been focused on in this consultation. Firstly, the financial literacy of our Indigenous members. There’s been a lot of work going in to ensure that that improves. The access to superannuation services for our indigenous members. There’s a lot of work going into that area. Entitlement, the ability – what entitlements and information are required to be provided to these members is also another factor that’s been focused on. Of course, ensuring that we are culturally and socially aware and advocate for these members, is an important part of what we’re doing in this area.

We do also from an administrative perspective accept different forms of identification such as letters or statements from a referee. These are all done to make easier access for members who do not have or may not have identify documents. One of the more recent developments is the providing access to the First Nation Foundation’s My Money Dream financial literacy program to help our members learn about budgeting, banking, insurance, and superannuation. We also at a GESB level and at an operational level offer work experience and employment opportunities through the WA Public Sector Commission’s Aboriginal Traineeship Program. So, all of these things together, I think would demonstrate to members that the Board, through to executive, though to staff have a very strong commitment towards Indigenous engagement and reconciliation.

Tricia Bailly: Thank you, Frank. The next question we have has been asked by Cheryl and I’m going to direct this question to Ben. I made a contribution to my account by BPAY recently and it took more than three weeks before I received a confirmation that the amount was credited to my account. Furthermore, the confirmation was sent by snail mail. When is GESB going to go digital? Ben.

Ben Palmer: Thank you, Tricia, and thank you, Cheryl, for the question. Firstly, I want to acknowledge that we do currently remain a significant user of paper and snail mail. I also want to confirm that it is a key strategic focus area of GESB, from the Board and the executive down, to improve our digital capabilities, improve our digital experience and enhance the way you can digitally interact with us. So, I wanted to acknowledge that. As I said, we do have a plan to improve our digital capabilities and experience. I’m very pleased to report that we are currently in process of rebuilding our Member Online platform. Many of you will be aware of our Member Online, or MOL platform, the section of our website where you login using your personal credentials and you can access your account information.

As I said, we’re currently in the process of rebuilding that platform. We anticipate that around the middle of next year, 2022, we’ll have that new platform go live for members. It will allow us much greater functionality to transition to the digital space. We intend to transition our paper forms into the digital space so you can interact with us and engage with us much more simply on an online environment and digitally. It will also allow us to store and maintain digital interactions and documents that you can access readily. It will also allow us to, in your particular example Cheryl, with confirmation of a contribution that’s come from your employer. It will allow us to do that in a digital format, but also in a more timely manner. So, we’re very much looking forward to that new Member Online platform being rolled out.

Of course, when it is, members will still be able to interact through the traditional channels, but we certainly recognise that’s an area we need to build our capability and functionality digitally. We have an exciting project underway at the moment that we hope to demonstrate to you and roll out to members around the middle of next year.

Tricia Bailly: Thank you, Ben. The next question we have is from David. I’m going to direct this to Paul. He’s already acknowledged that he doesn’t have a crystal ball, but realistically, what level of returns should members expect over the next few years? Paul.

Paul Taylor: Certainly, the million-dollar question there. Thanks, David. So, just to give you an understanding or idea of how we construct portfolios. We do so with the aim of meeting our investment objectives. So, just as an example, My GESB Super or My West State Super have investment objectives of inflation plus 3% per annum over the medium to long term. That’s how we aim to structure the portfolios. So, past performance has been significantly or meaningfully higher than that, but certainly with the way the portfolios are structured we do expect that sort of level of return, that inflation plus 3% for those. For the various other options – for the more growth orientated slightly higher and conservative slightly lower, but certainly no guarantees there, David.

Tricia Bailly: Thank you, Paul. We’ll just check if there’s some more questions coming through at the moment. Here we are. We’ve got another one. Again, for Paul. Could you tell me whether GESB is investing in renewables and supporting investment in new and emerging technologies? Really good question.

Paul Taylor: Yes. Thanks for that question. So, the short answer is yes, we are investing in such things. As I mentioned before, our process is all about integrating ESG, whether it’s risk or opportunities into our investment process. So, there’s quite a few examples whereby we do this. Some examples within infrastructure, one of our managers ClearBridge have an investment in NextEra Energy, which is an integrated utilities business that’s focussing on windfarms, with the largest US windfarm based in Florida. The same manager has investments in Brookfield Resources, again, focussing on solar, hydro, wind, and also some storage technology.

Also, within some of our property managers’ world, we’ve got commitments from various ones including Lendlease which have committed to using 100% renewable energy as part of its buildings by 2030. So, there’s plenty of examples where we’re doing that. I think going forward as been alluded to, it’s a big issue going forward, and we’d expect more and more focus of this going as they’re going forward.

Tricia Bailly: Thank you, Paul. Jess has asked the next question. I’m going to direct this to Ben. I’ve recently left the public sector, why can’t GESB accept my superannuation guarantee from my new employer?

Ben Palmer: Thank you, Tricia, and thank you, Jess. Another good question and I think one we do get quite a lot of from members. So, I think the reason it’s important to remember GESB is established and constituted under WA State legislation. That legislation establishes GESB and the GESB Board and prescribes the functions and obligations and possibilities of what GESB is able to do. As we’ve mentioned earlier and is, I think well known, is GESB is a provider, administrator of superannuation benefits for WA government and WA public sector employees. So, in structuring GESB and constituting GESB under the State legislation, it serves to provide for retirement benefits to people who are employed by the government.

So clearly, through that legislation the flow of superannuation contributions from prescribed employers into the GESB funds, so the employers that we can accept contributions from are prescribed in our State legislation. As I said, they have been prescribed to serve employees of the government. At present, if you leave the public sector and work for a non-public sector employer, therefore it’s one that’s not prescribed under our governing legislation and unfortunately, we’re unable to accept employer contributions, so they’re superannuation guarantee contributions from those employees.

Tricia Bailly: Thank you, Ben. We’ll have a look at another question here coming through. Here we go. Another question for Paul asked by Maureen. An earlier speaker indicated GESB is now publishing ESG risks, including carbon emissions in Australian and International share portfolios. Will GESB make this information available to members in a transparent manner on the GESB website?

Paul Taylor: Thank you for that question, Maureen. So certainly, it is our intention to be fully transparent in everything that we do, including relating to ESG and other factors. So that is something that we can look to provide going forward. Just to answer the question well do so, if it’s of interest as well, I do have the carbon intensity of our portfolio for Australian and International shares on hand. This is based on data as at 31 December 2020 and as calculated by MSCI of our investment portfolio. So, our carbon intensity of the portfolio as at that date as measured by tonnes of carbon dioxide per $1 million of sales was 317 as at that date. Which is below the benchmark if we just – we’ll be investing in accordance with this market benchmark of 324. With the international equities, 188 versus the benchmark of 206.

So, you can see even as of late last year the amount of carbon emissions was lower than benchmark. We acknowledge, as I mentioned, that it is higher than what we are striving for. So, the figures we are looking to reduce by an amount of 35% by 2030.

Tricia Bailly: Will that information be available on our website, Paul, I think she asked?

Paul Taylor: Yes, so that’s certainly the – we can certainly look at making that available going forward.

Tricia Bailly: Thank you. Another question I’m going to direct to Paul, which has been asked by Stephanie. Will GESB consider moving to more ethical and environmentally safe investments in the near future? Many members that I speak with are not willing to be involved with investments in the fossil fuel industry.

Paul Taylor: Thanks for the question, Stephanie. So, I have touched on a few of these matters before, but just to reiterate that we are integrating ESG considerations across the whole portfolio. So, to look at moving towards more environmentally aware investments that clearly is a direction of travel, provided it makes financial sense to do so. As I said, we don’t have the view that we should just sell things at any price, but to look after the superannuation of our members to achieve the best financial outcomes and take that into account. I have mentioned before about some of the other initiatives, some of the investments that we have made through ClearBridge and NextEra Energy and Brookfield Resources and some of the commitments of our property managers also. So, it is something that we are looking to do.

To answer specifically, as well, the question around fossil fuels. I think that really falls into the category of whether a separate option is launched, which will be considered as part of the 2022 review that we’ll be commencing to do that then.

Tricia Bailly: Thank you, Paul. The next question we have is from Trevor, and I’m going to direct this to Ben. Are retirement plans managed by the same fund management group?

Ben Palmer: Thank you, Trevor. Thanks, Trish and thank you, Trevor, for the question. That’s a great question and one that is a particularly – I have a particular interest in. Some members may know that I was previously the General Manager of Investments before becoming Chief Executive Officer and on doing so Paul took over as GM Investments. So, I’m going to answer your question from a couple of lenses. So, when you talk about fund management group, I’m going to assume that you’re referring to what we generally term fund managers. So, they’re entities or businesses that manage investment portfolios through a range of different strategies and approaches.

So, to answer your question, retirement plans – and again, I’m going to assume – retirement plans I’ll take to mean either the Retirement Income Scheme, the allocated pension scheme we offer, or I’ll also answer from a perspective of all our different schemes and investment options more generally. So, all the different schemes and options all invest in the same asset class pools. So, there isn’t a unique or differentiated underlying assets that the different schemes invest in and the different options within those schemes. There are clearly different asset allocations and different risk and return profiles but in achieving those asset allocations and risk and return profiles all those options invest into the same underlying asset pools, which is actually quite important for our efficiency. It also supports what Paul mentioned earlier about really integrating ESG and broader risk management into our whole integrated approach as our core approach.

So no, the retirement product is not managed differently. In terms of fund management groups, we have the internal investment team led by Paul. As Paul’s mentioned, we do use external fund managers for the majority of our assets with the exception of those cash term deposits. And we appoint and utilise a large number of different funds management groups or fund managers as we generally call them. There's around 34, I think from memory at the moment, of different investment managers or fund managers that we use. We do specify the mandates and the parameters under which they can manage and then select and build portfolios on our behalf and on your behalf, so we're in control of the strategy. We're accountable for the strategy, investment risk profile, asset allocation, investment objectives, risk objectives, investment outcomes. But that is implemented through, as I said, around 34 external professional investment managers that we issue mandates to manage your assets. I hope that answers your question.

Tricia Bailly: Thank you, Ben. Another question, asked by Philip. This is again for you, Ben. When will I be able to view my GESB account online?

Ben Palmer: Thank you, Philip. At present we do have a Member Online platform which you should be able to access and view your GESB account information on. If you don't have an account established, you should be able to do so by contacting our Member Services Centre and saying you'd like to set up a Member Online login. As I said earlier, we are currently in the process of building a new updated version of that Member Online platform, so we acknowledge there's more information we could provide. At present you can go in and see your account balances and a summary of your transactions. You can access all our information through our website, of course, more general information.

The new Member Online platform will have much enhanced capability over time as we go through phases of development of that platform. We'll have online document centres, so letters and correspondence will be housed in there. As I said earlier, we'll be transitioning to digital-based forms so you can put requests and changes of beneficiaries, et cetera, all through in a digital format. But we do currently have a Member Online capability. If you need to or want to establish that account, please get in touch with our Member Services Centre.

Tricia Bailly: Thank you, Ben. Steven has asked the next question and I'm going to ask Paul to respond to this one. What are your views on inflation and what are you doing to protect our money against rising interest rates, Paul?

Paul Taylor: Okay. Thanks, Steven, for the question. It's a really good question, a really important question. We spend a lot of time thinking about this exact question. We mentioned before inflation in Australia, based on the current print, is still relatively low, the headline rate of around 3% over the past 12 months and the trimmed mean, which takes off all the really volatile items, of 2.1%. That's within the RBA band so still relatively contained at this stage. However, we do expect higher inflation to come.

There's a couple of reasons for this. One is on the supply side. The other side, with interest rates being so low for so long, there is a bit of a pent-up demand as well, so we'll see inflation on that side as well. Those couple of factors, we do expect that inflation will increase going forward. That can be pretty damaging to retirement savings in the sense that the amount of money that you've got, we'll be able to buy less going forward with that, so it's certainly a massive challenge. The other factor that makes it a bit of an issue is that with higher inflation generally comes high interest rates. That can negatively impact some of the investments that we do have.

So to what we are actually doing and to mitigate these risks, I mentioned before about the very well-diversified portfolio. We do have some investments that will perform quite well in that environment. There will be some investments that won't do as well, but having that really strong diversification across the portfolio, it means that we aren't exposed to any one particular risk. More specifically - I did touch on it before as well - is that from a strategic perspective we did increase exposure to investments with more of an inflation-linked cash flows in the infrastructure sector and reduced exposure to bonds for some of our readymade options and that will increase the protection against that inflation as well. Yes, it's a good question. As I said, that diversified portfolio and that slight change to asset mixes should assist.

Tricia Bailly: Thank you, Paul. The next question we have is from [Yvonne]. I appreciate the ESG approach and net zero 2050 ambitions of GESB. However, responsible investment, particularly divestment from fossil fuels due to the impact on climate change, is an issue which is very important to many members right now. We want the option of fossil fuel free portfolios. Will you offer a fossil free portfolio in the next six months? At the least, will you survey members to find out if this is what they want? Maybe, Ben, would you like to answer that or Paul?

Ben Palmer: Oh, yes, I’ll take that one, yes. Thanks, Trish.

Tricia Bailly: It's quite a long question.

Ben Palmer: Thank you, Yvonne. Yes. Yes. This is a very, very current and important issue. As Paul mentioned earlier, the pace of change of concerns and interest and value placed on managing these issues properly is certainly front of mind for us. As mentioned earlier, ESG is one of the top strategic focus areas for the Board. As Paul said, we have a roadmap for our net zero transition and ensuring that all our investments reflect the goals of the Paris Agreement and indeed our investments have plans and robust actions in place to make those transitions. That is the way we're working at the moment and that's what our roadmap is there to achieve.

I do acknowledge that some members in particular feel very strongly about fossil fuel exposure and really do desire or demand portfolios that don't have any exposure to those types of investment. I don't have a firm answer as to whether we'll offer a fossil free option in the next six months. I think even with the best will in the world, that would be a very difficult timeframe to achieve.

In terms of the second part of your question, I think it's critically important, indeed it's incumbent on the executive and the Board, to understand what the need and perspectives of our membership is. So we'll certainly work with our Member Engagement teams to go through a process of how we best understand what the need and perspectives of our members are, because ultimately as a Board and as GESB, we are obliged to provide financial outcomes for your retirement but also to act in your best financial interest and reflect your needs and perspectives. Whether that's a survey or other means, I couldn't specify at this stage. But as I've said, we'll absolutely give that commitment to better understand the needs of our membership as a whole, make sure we reflect the overarching aggregate needs of our membership. That may not be all products, all solutions to all people, but as I've said, we're absolutely committed to making sure that we understand the needs of our members and how important these issues are to them.

Tricia Bailly: Thank you, Ben. The next question we have is from Lilama. I'm going to direct this question to Paul. Is the investment outcome updated on a daily basis?

Paul Taylor: Thanks for your question, Lilama. Short answer is, yes, if I understand the question correctly. We value the portfolio on a daily basis. We calculate unit prices on a daily basis and publish those online as well, so each day it is updated for the latest available valuation of the investments and therefore the valuation of your account.

Tricia Bailly: Thank you, Paul. The next question we have is quite a common question I get in the workplace from members too. Thank you for this question, Anthony. I'm going to direct it to Ben. Why does GESB pay death benefits to the estate rather than to the person I would like to receive my super benefit?

Ben Palmer: Thank you for the question, Anthony. Yes, thanks, Tricia. The short answer is we currently pay death - well, we have traditionally paid - death benefits to the member's estate, because that's the way our legislation was set up and that's what it provides for. I should add that solution generally is a very robust one in the sense that through the estate the member can determine and make decisions around where their assets go, so the super benefit going into the estate forms part of the estate assets. It also importantly means there isn't a situation where the Board needs to exercise discretion as to where a superannuation benefit is paid. I just wanted to reiterate that there is some very robust basis in why benefits have traditionally been paid to the estate. However, we certainly acknowledge that there's lots of instances where super may be the dominant asset. Therefore, as the single most important asset, it could be dealt with more efficiently. We also acknowledge that in those circumstances to go through Grant of Probate or Letters of Administration is perhaps a process that may take longer than members would like and may not be entirely necessary.

I'm very pleased to announce, or to inform you that we have recently made changes to our governing State regulations, which do allow the Board to accept binding death benefit nominations. That allows the member to, subject to meeting certain criteria, instruct the Board as to how to distribute their superannuation benefit on their death, which then means it doesn't go into the estate if we have a valid binding death nomination in place. That is quite a recent amendment, so that's very pleasing. It does give you that option of making a valid nomination rather than going through the estate. It means that if there isn't a binding nomination in place, then the default position prevails and the benefit does still go through to the estate. It provides members with more flexibility but certainly provides for those members that don't want it to go into the estate and won't have to then seek a Grant of Probate or Letters of Administration to access the super for the distribution of the super benefit.

Tricia Bailly: Thank you, Ben. For further information on that or clarification, you can ring our Member Services team. They would be happy to provide that form for our members. The next question is from Marianne and I'd like to direct this to Ben. Please explain how you are continuing to lower the fees on members' funds invested. Could you put a cap on the total fees paid per member, Ben?

Ben Palmer: Thank you, Marianne. It's a really, really, really good question, because efficiency of operation and particularly ensuring there's not upward pressure on fees is a real challenge. It's important that GESB maintains its relative efficiency compared to other funds in the industry. When we say lower the fees, as I announced in the earlier pre-recorded presentation, we were able to lower the administration fees on the GESB Super scheme earlier this year, which was very pleasing. That's really a combination of operational efficiencies in recent years, partly a result of changing premises in 2017 but also in ensuring - we're very disciplined about how we spend members' money. We acknowledge and live by the mantra that every dollar spent is ultimately members' funds. It would otherwise go into their account balances and their retirement savings.

We have a very high threshold for expenditure. We're very focused on the operational efficiencies. We are sometimes in a position to reduce fees. Clearly scale is important in the efficiency and ability to reduce fees, but it's as much around ensuring that fees don't go up in an increasingly regulatory environment and lots more challenges such as this Annual Member Meeting for example, which is not a challenge - it's a pleasure - but there's more and more that we have to do as a fund, so it's very important that we maintain those cost pressures.

In terms of a cap, that more goes to the structure of our fees. We do look at that very closely also. We do annual pricing reviews that reconsider our fee structures. We do have, as you're probably aware, a fixed-dollar monthly charge as well as an ad valorem or a scaled percentage-based fee. We always look regularly at the blend of those. As part of that consideration, we do look at whether we can implement fee caps. That's something we will be looking at, but I'm not in a position to say yes or no in terms of a fee cap at this stage. But we certainly take that into consideration on our annual pricing reviews.

Tricia Bailly: Thank you, Ben. Graham has asked a question. How do you select fund managers and how do you assess their performance? Paul, would you like to answer that?

Paul Taylor: Sure. Thanks, Tricia. Thanks for your question, Graham. To select fund managers, we go through a really detailed due diligence process. We do use the services of a what we call an asset consultant who does research on each of those, a range of investment managers, doing thorough due diligence, looking at matters such as the organisational strength, alignment of interest, their investment philosophy, their investment process, the key people, how they actually work together, risk management's a key important factor, their historical track record and the level of fees. There's a lot of work that goes into it. As I said, we use an asset consultant to assist.

We also do our own due diligence on investment managers as well. That due diligence also includes operational due diligence, so not just to make sure they're making good investment decisions but the back office and operational support that those managers have is sound and robust and appropriate for what we are trying to achieve. We do have, again, a very rigorous performance monitoring assessment and program. Each of our investment managers have really clear objectives in terms of what they are expected to achieve. Those objectives are dependent on the mandates that they do have. Certainly we do monitor that. We get daily feeds on their performance. We report through the Board on a monthly basis on various performance. Our Investment Committee as well get regular performance on that. It's a really detailed process that we go through.

Probably one further important step in terms of what we do with our investment manager selection, once we have gone through that process of selecting appropriate fund managers, it does go through our Investment Committee, which is a sub-committee of the Board and comprises independent investment experts on that as well, and through the Board and ultimately does require Treasurer approval for an appointment to be made, so has a really rigorous process.

Tricia Bailly: Thank you, Paul. I think we've come towards the end of our meeting this evening, so we'll close off the questions there. Thank you everyone for your questions this evening. We had some really great questions from members, which is fantastic.

That brings us to the end of our Q&A session and tonight's meeting. If there's anything you'd like to revisit from this evening, a video of this meeting and the minutes, along with the answers to any outstanding questions, will be available on our GESB website within the next month. Our website at gesb.wa.gov.au is an excellent source of information relating to your super and we encourage you to explore it. We've provided some key links on the screen now to some of the resources mentioned tonight, including our member outcomes assessment and investment performance pages.

As you've heard this evening, we're committed to understanding and delivering on your expectations relating to your super. We're here to help you learn more and make more informed decisions. We hope you have enjoyed the opportunity to hear from our GESB speakers tonight. We'd like to say thank you once again for attending our first Annual Member Meeting. Thank you and good evening.

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