Publication:Sea Talk Winter 2004/Super performance
By Louise Butcher
The Military Superannuation Benefits Scheme has turned around its performance, outperforming most other Australian superannuation funds over the past year.
This is great news for members that two years ago saw MSBS returns plummet after the stock market dropped rapidly, resulting in a loss of around 8 per cent, their worst loss in the scheme's 13-year history.
Board member and trustee, AIRCDRE Lee Roberts, said a formal investment committee had been established with support from professional investment advisers well known in the industry. The new committee provided strategic investment advice and new ideas to the board.
Recognising the uncertainties in investment markets in recent years, MSBS is using the expertise of the investment committee to look at other investments that might reduce reliance on stock market returns and further reduce risk and maximise returns. Possible examples include toll roads, airports and port facilities.
AIRCDRE Roberts said that despite the downturn in 2002 and much of 2003, sticking to the fund's high growth investment strategy had allowed MSBS to rebound so successfully as markets recovered. Since July 1, 2003, the fund had already achieved a return of about 13.9 per cent for its Growth Strategy and an impressive 15.7 per cent in the High Growth Strategy.
AIRCDRE Roberts said that because military members were generally younger people with many years to go before accessing their retirement income, their money sat in the fund longer than many other funds.
Investment effects were also cushioned by the highly valuable guaranteed unfunded employer benefit based on years of service.Because of these factors, MSBS focussed on a long-term investment strategy.
"The newly formed investment committee meets monthly and advises the board on new investment opportunities," he said.
"It replaces a system using a primary adviser supported by the use of second opinions. We now have a greater variety of expert opinions available to assist us making decisions.
"You won't see the results of that advice for another year," AIRCDRE Roberts said.
When asked what he felt was the most important thing about the scheme that members should know, AIRCDRE Roberts said there were two considerations: that it used a long-term investment strategy, and that the scheme was unique in its structure.
"This scheme is a hybrid scheme with two components.
"Our pay contributions are invested in the fund and subject to the fluctuating fortunes of investment markets. The second component ... and probably most valuable ... is the unfunded employer benefit which is unaffected by fluctuations in investment returns, so you get the best of both worlds."
