Expression of Interest

02/12/2021

Growing your super is our top priority.

Growing our services to you is another.

Keeping fees low is also important.

However, the costs of running super funds are also growing.

And because we’re a small super fund with a small number of members,  it’s getting harder for us to sustain these costs.

So we’re about to ask a select group of super funds to express an interest in partnering with us into the future.

This formal Expression Of Interest (EOI) requires those Funds to meet our specific requirements for such a partnership. This includes demonstrating their ability to maintain the defined benefit scheme and insurance coverage for our specific member occupations.

The requests for expressions of interest are being sent this week and we’ve asked for responses early in the new year.  If a change of fund is found to be in members’ best interests, this is likely to happen in Oct/Nov 2022 or March/April 2023.

What is the Expression of Interest?

The EOI is a lengthy questionnaire that will help AvSuper uncover if there is a potential new home for AvSuper members’ retirement savings.

There are numerous requirements, and four key themes:

  1. To be “Equal to or greater net benefit to members” noting this is also a regulatory requirement.
  2. Ensure maintenance of defined benefit scheme and insurance coverage for specific member occupations
  3. Be a tailored service model
  4. And offers alignment with key stakeholders incl. principal employer and other nominating bodies.

We’ve created a short video to explain what is happening and why.

What happens next?

 We have requested responses to the EOI by early 2022.

In a highly regulated industry like superannuation, mergers are a multi-step process and can take anywhere from 1-3 years.

The first step is to consider if there is an appropriate partner fund for AvSuper members. This is the ‘Expression of Interest’ process that is now underway.

At the end of the EOI process, AvSuper may choose to sign a ‘memorandum of understanding’ with one fund, and then commence a due diligence process.

We will continue to provide members with regular updates on what is happening at AvSuper.

Strategic decisions, such as a merger, are made by the AvSuper Trustee, who is charged with delivering the best it can for members. Of course, we will continue to engage with employers including Airservices, employee bodies and other stakeholders in respect of any merger activity.

If a merger did become the best option for AvSuper members, we would let you know as soon as any decision was made. At the end of the day, our first and last priority is our members, and we will do whatever is required to deliver the best outcome to them.

 

Where can I learn more?

We have created a set of FAQ’s that we believe will be relevant for AvSuper members and stakeholders.

If your question isn’t answered here or you need additional information and assistance, please contact our Member Advice Team via phone (1300 138 751), AvChat, or email.

A Webinar regarding the EOI process was also held 9th December 2021. You can view the Webinar here if you were unable to attend.

Plus, we’ll keep you informed during the whole process, through:
·       updates on the web page

Kind regards,

Michael

Michael Sykes
AvSuper CEO

Frequently asked questions

Is AvSuper going to close?

We don’t know yet.

What we do know is that it’s getting harder and harder to deliver the services members want at the same time as reducing fees and meeting ever increasing regulatory requirements. At the same time, the aviation industry of the future is likely to look very different to today.

So, we are considering if AvSuper members would be better served in a different, more sustainable fund.

AvSuper has been a community-minded superannuation fund for the past 31 years. We strive to serve all our members with a dedicated commitment to members in the aviation community, many of whom we know personally.

The EOI process is being carefully managed with deep consideration to what is in the best interests of our members.

At the end of the day, what’s most important is securing the best retirement outcomes we can for our members. And if that means moving members to a new fund or a merger, then that is what we will do.

Why issue an EOI now?

Being a small super fund, AvSuper has faced the rising costs shared by a smaller number of people than say in a larger fund with a much bigger member base.

The costs of running a super fund are continuing to rise, with legislative changes coming thick and fast, and members seeking more services and lower fees.

As a result, we are now at a crossroads and the EOI is about making sure AvSuper members’ best interests will continue to be met in the long term.

Why is a merger now being pursued?

The regulator has been encouraging smaller super funds like AvSuper to merge, with particular focus on those under $10 bilion.

At the same time, the recent Your Future, Your Super letter our members received, combined with changes within the aviation industry, has led us to consider:

  • What is our future, and
  • How can we best deliver for our members?

As a result, AvSuper has now released an Expression of Interest (EOI) to a select group of Super Trustees.

Does this mean that Avsuper is now in a holding pattern? Or will you continue to look for improvements (like the recent fee cap)?

Everyone at AvSuper is working harder than ever to ensure our member’s best financial interests are upheld during this challenging time.

This means continuing to deliver improvements for our members where we can.

Will members have a say in the outcome?

We will continue to provide members with regular updates on what is happening at AvSuper.

Strategic decisions, such as a merger, are made by the AvSuper Trustee, who is charged with delivering the best it can for members.

Of course, we will continue to engage with employers including Airservices, employee bodies and other stakeholders in respect of any merger activity.

If a merger did become the best option for AvSuper members, we would let you know as soon as any decision was made. At the end of the day, our first and last priority is our members, and we will do whatever is required to deliver the best outcome to them.

What happens to Defined Benefit members?

The defined benefit scheme will continue to exist, regardless of any merger or other change.

In fact, one of the key requirements is that a prospective merger partner must ‘Ensure maintenance of defined benefit scheme and insurance coverage for specific member occupations’.

Will defined benefit capability be required of shortlisted funds?

Absolutely. Defined benefit capability is an essential criteria for any merger partner.

Is a merger definitely happening?

No. A merger will only take place if it is determined to be in members’ best financial interest.

Is the performance test the reason for the EOI process and what are the implications for next year’s performance test?

The Trustee has an obligation to consider many factors in assessing whether the fund will be sustainable into the future, and whether it can continue to serve the best financial interest of members.

The result of the performance test was one consideration among many factors influencing the decision to go through an EOI process.  Other considerations included:

  • The regulator has been encouraging smaller super funds like AvSuper to merge, with particular focus on those under $10billion.
  • The aviation industry continues to undergo considerable change.
  • The costs associated with running a super fund are increasing.

AvSuper will continue to strive to provide the best outcomes for members, including working to ensure our fees and investment returns pass the performance test in 2022.

Will we retain the AvSuper identity?

We don’t know yet, as it depends on whether or not it is in the best interests of members to move to a new fund and then, what the best structure is to deliver the best outcome for members’ retirement savings.

I was unable to attend the Webinar regarding the EOI. Where can I view it?

AvSuper held an online Webinar regarding the Expression of Interest process on the 9th of December. You can view the Webinar through Vimeo here

Phone 1300 128 751 (Local call)
Email:
avsinfo@avsuper.com.au