Cbus Super members and members of the Media Super division are set to have their weekly administration fee reduced from $2.00 to $1.50 from July this year.
Cbus CEO Justin Arter says the move to reduce the fee is a result of Cbus’ growth strategy. The announcement comes after Cbus Super and Media Super successfully completed a merger last month.
“The benefits of scale are clear, enabling a downward trajectory on fees. Mergers are a contributor to this. Lower fees will help members to grow their super balance,” Arter said.
“Cbus’ total product fees are competitive and greater scale enables Cbus to spread fixed costs to reduce the average cost per account. Scale also brings greater capacity to invest in the Fund’s internal capabilities.”
The weekly administration fee covers the day-to-day management of members’ accounts, Cbus said.
Cbus Super said the fund has reduced investment fees by $410 million since 2017 for the Growth (MySuper) option through the ongoing internalisation of our investment capability, $170 million of which was in FY2021. Members benefit from this reduction in investment costs alongside internalisation generating solid investment outcomes.
Changes to insurance premiums
Cbus Super also announced the cost of death and total and permanent disablement (TPD) cover will also be changing for some members (based on age groups and occupation category (manual, electech, non-manual or professional), following a re-alignment to reflect recent claims history.
TPD and Death claims from younger members have been lower in recent years. Claims for misadventure and accidents have lowered during the Covid pandemic. As a result, premiums for younger members (in most categories) have reduced, Cbus Super said.
Whereas claims from older members, especially in higher risk blue collar jobs, have increased over the last three years. For these members premiums are increasing.
Arter added, “Insurance through Cbus protects our members and their families when they need it most. We’ve been able to negotiate a decrease or stable premiums for younger members, while a rise in premiums has been unavoidable for some member cohorts to ensure the cost of providing insurance is reflected in the price.
“Over the three years to 31 December 2021 we accepted 97.3% of all claims made. This was 100% for death claims and 96.6% for TPD claims. This is much higher than the industry average of 89% for TPD claims as recently reported by APRA.
“Cbus knows how important insurance is and we are committed to keeping premiums as low as possible. As a result of strong advocacy, Cbus was able to negotiate coverage for members aged under 25, or members with balances under $6000, as part of the Putting Members’ Interests First reforms. That is why Cbus is one of few funds that does provide important default cover for young workers and workers in hazardous jobs.
“Under this exemption, Cbus has paid benefits of over $25 million (as at 31/03/22). Of this one third was for members who were teenagers or in their 20s and around two thirds have been paid for members under the age of 39. Without this exemption these members would have received no insurance benefit at all. These members have come from every state and territory in Australia.”
There will be no change to income protection premiums. Media Super members’ premiums will also not be affected.
Details are available in the Significant Event Notice.
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