(Pictured: John McMurtrie)
Some of the Labor Government’s superannuation initiatives are likely to fall by the wayside under the Coalition Government, such as ‘auto consolidation’, and others may be repealed, such as the $3,800 fine for employers who don’t submit their data in a “complying form”, according to John McMurtrie, the chief executive of Link Group.
But, he says, important work on streamlining the system will continue, such as changes which will make it easier to roll-over between funds, following the formation of the ‘Affiliation of Superannuation Practitioners’ which represents the big administrators, including Link’s AAS.
McMurtrie, a veteran financial services executive – including running UBS Australia – became the boss of Link in 2002 prior to its acquisition by private equity firm Pacific Equity Partners seven years ago. He was effusive last week during a rare press briefing. The briefing covered all aspects of the company’s business and McMurtrie’s view on the future. It had the feel of a pre-IPO information seminar.
McMurtrie doesn’t shy from the inevitable IPO questions. He patiently points out that seven years is probably getting to the end of a typical PE investment and an IPO is always an option, along with the usual other options. One clue was his observation that AAS, which provides about two-thirds of group revenue, was now of sufficient scale for profitability. He did not believe that its main competitor, SuperPartners, was in the same happy position for various reasons, one of which was its ownership structure. “I’m glad my clients are not also shareholders,” he said.
Both AAS and SuperPartners have spent small fortunes on systems upgrades in recent years – in AAS’s case about $225 million over six-and-a-half years. As has been widely reported, SuperPartners has had troubles and cost overruns with its upgrade and has probably spent something similar.
Link recently acquired the systems company SyncSoft, which has good penetration among government funds that have tended to maintain insourced administration. McMurtrie believes that most, perhaps all, of the outsourcing which will be done has already been done. However, just last month AAS picked up the administration of the small Reserve Bank of Australia staff super fund.
With ‘auto consolidation’, which was to require an opt-out decision by members to not have multiple accounts merged, former Minister Shorten announced prior to the election a deferral pending a review by the end of 2014. His predecessor, Chris Bowen, planned to lift the dollar amount under which auto consolidation would occur to $6,000, which McMurtrie believes is too high.
But he would like to see the phasing out of cheques, which still cover about 50 per cent of the number of employer contribution payments processed by AAS, but only about 10 per cent of the total dollar value amount.
Like most people in the industry, he would also like to see some stability. Arthur Sinodinos, an assistant treasurer, is the seventh superannuation minister in as many years, McMurtrie pointed out.
While AAS and the share registry business, which accounts for a further 25 per cent of revenue, attract most attention from analysts, Link has put together a range of smaller specialist administration and advisory businesses over the years. An early purchase was Orient Capital, a company which analyses company share registries, data business Empirics and a 10 per cent interest in PEXA, a government initiative which looks to streamline the administration of property transactions.
