Essential Super

We assessed whether the fees and costs paid by ES members (administration fees, and total fees & costs) are competitive. In doing so, we used segmented member data to evaluate the fee and cost outcomes across the membership. 

We assessed the level of investment returns delivered to members after the deduction of fees, costs and taxes. 

We assessed whether the investment volatility of each investment option was appropriate for the risk profile of the investment. 

We worked with an independent research house to benchmark the quality of our member services. The overall finding of the review was that member services require improvement, especially in relation to online education content and financial advice services.  

Uplifting these member services is a key priority for the trustee and are being actioned as part of its business plan. 

To evaluate the appropriateness of the insurance strategy for ES, we used AIL’s Annual Insurance Review for 2023, which was conducted by an independent research house. ES Insurance features were assessed to be appropriate for a product that offers a ‘simple insurance offer’ as part of the product design.  

It was also assessed that the claim processing time for 70% of Death & 73% of TPD insurance claims are better than APRA’s average processing time. 

ES does not charge insurance premiums on an occupation class basis. Therefore, the comparison of the base ES insurance premium rates was supplemented with a comparison that incorporates different occupations across competitor funds.  

AIL’s Annual Insurance Review for 2023, found that for Death and TPD (Total and Permanent Disablement), more than 98% members are paying insurance premiums that are ‘at median or cheaper’ in comparison to the industry/peers. 

It is estimated that the average ES member pays premiums which are 0.3% of their salary. 

Scale is important as it allows AIL to meet its commitments and negotiate competitive arrangements for members. As at 30 June 2023, based on APRA’s Annual fund-level superannuation statistics, AIL was the 7th largest provider of superannuation in Australia with total super assets of approximately $110 billion and a membership of approximately 821k members.  

As at 30 June 2023, ES had superannuation assets of $4.4 billion and a membership of 122k members. 

100% of ES investment options held assets of more than $30m and therefore did not have any imminent last man standing risk. 

As at 30 June 2023, based on APRA’s fund level data, AIL’s superannuation operating cost ratio was ranked among the lowest in the industry (1st quintile). AIL’s operating costs have increased over the last few years due to regulatory  compliance and aging infrastructure costs. However, a number of projects are underway to further automate and streamline our processes, and improve our technology platforms, which are expected to stabilise AIL’s operating costs in the longer term. 

Dividend payments that were paid to our parent companies were made in accordance with AIL’s Capital and Dividend Policy, which requires that the amount and timing of any dividend is consistent with AIL’s fiduciary duties and members’ best financial interests. 

We confirmed the appropriateness of each category of fee and cost charged to members.  

The fees and costs paid by ES members were assessed as being sufficient to cover the costs of the product and that the manner in which fees and costs are charged to members is appropriate.