1
From:
DAVIES, Michael
Sent:
Monday, 27 June 2016 4:38 PM
To:
@apra.gov.au
Cc:
OSFSFT; LALOPOULOS, Angela
Subject:
Proposed appointment of Sunsuper [SEC=UNCLASSIFIED]
Attachments:
1288_001.pdf; D16 207388 Employer Sponsor - APRA - Note on OSF SFT - 27 June
2016(2).....docx
Dear

Thank you again for speaking with me this morning. As discussed, the RBA executive and OSF Trustees have
approved the SFT of the OSF to Sunsuper.
Attached is the official letter from Mr Campbell, the RBA Executive that is leading this project. Also attached is a
short paper which outlines the reasons why Sunsuper has been selected, the benefits to employers and OSF
members of the SFT, and the next steps required if APRA confirms its participation in the successor fund.
Could APRA please consider the RBA’s and OSF Trustees’ proposed transfer of the OSF to a sub‐plan within Sunsuper
and approve the execution of the Nominated Employer Deed if it wants its OSF members to retain their benefits in the
RBA sub‐plan after the SFT takes effect.
If possible, it would be great if you could come back to me on this matter by later this week.
Thank you again for working with the RBA and OSF Trustees on this project. Please feel free to contact me if you need
any further information.
Best regards,
Michael
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Appointment of Sunsuper as the Successor Fund for the
RBA OSF
After  a thorough procurement process, the Reserve Bank of Australia (RBA)  has selected Sunsuper  as its
preferred multi-employer fund to replace the RBA OSF via successor fund transfer (SFT).  The OSF Trustees have
completed their equivalent rights analysis and concluded that proceeding with an SFT would be in OSF members’
best interests. The RBA now seeks the agreement of APRA to participate as a sponsoring employer in the
successor fund. All parties (OSF Trustees, RBA, APRA, NPA and Sunsuper) could then proceed with the execution
of the legal agreements relevant to each, and the transition process could commence.
The RBA requests APRA review the proposed transfer, and approve its participation in the successor fund, for the
reasons detailed below.
Selection of Sunsuper
Sunsuper is a large industry fund which has over 1 mil ion members and $34 bil ion of assets.  It is sponsored by
the Chamber of Commerce and Industry Queensland, Queensland Council of Unions and the Australian Workers’
Union.  Sunsuper has a large retail membership, but also has
corporate clients with
members
and
in assets. The Board is comprised of three union-appointed directors, three employer-appointed
directors, and three independent directors.    The RBA has carried out additional due diligence on Board
functioning.

Of the shortlisted firms, Sunsuper was assessed as offering the best value for money, based on the al -round
strength of its offering.
The Australian Government Solicitor has overseen the tender process

Sunsuper’s proposal also offers tangible benefits for OSF members and employers.
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link to page 4 link to page 4 Benefits for Members
OSF members wil  benefit from enhanced services within Sunsuper including:
•  Investments - Sunsuper offers 21 investment options compared to the 10 options provided by the OSF, and
allows daily rather than quarterly switching. Sunsuper’s after-tax, after-fee investment returns have been
equal to or better than the OSF’s returns for nine of the 10 accumulation options for the periods of 3 years
and 10 years to June 2015 (Table 1).
•  Investment fees – Sunsuper’s investment fees to be paid by members are lower than those currently
charged on each of the equivalent OSF options, for some options considerably lower. In aggregate, there are
estimated fee savings for the OSF membership in the order of
(Table 1).  Consistent with
the OSF, members will not pay any administration fees in Sunsuper.
•  Member services – Sunsuper’s website has much more functionality than the OSF’s website, including a
wider range of calculators, full transaction history, online education, videos and market updates. Sunsuper
also offers additional member services such as member education, financial planning, and account-based
pensions.  Sunsuper’s call centre has longer hours than the
call centre, providing members with
more flexibility to contact the fund outside standard RBA and APRA working hours.
•  Insurance – Sunsuper offers better insurance arrangements than the OSF. These arrangements will be
confirmed in the transition to Sunsuper as insurance companies’ offers are binding only for a few months.
However, based on currently available information, accumulation members would get the OSF’s standard
death and TPD cover at significantly lower premiums than the OSF charges. Accumulation and defined
benefit members would also have the additional option of purchasing additional death, TPD and income
protection cover.

To help to ensure that OSF members retain equivalent rights, the OSF benefit design has been replicated in the
successor fund’s Plan Rules for al  categories of members. Moreover, fortnightly pension payments will continue
to be paid at the normal time; defined benefit entitlements and pensions will continue to be supported by a
separate pool of assets and backed by the three employer sponsors; and the RBA wil  monitor the RBA sub-plan
via a Policy Committee as well as ongoing direct interactions with RBA HR and Finance.
Table 1: Fees and Historic Net Investment Returns
OSF Option
OSF Fees and
Sunsuper Fees
3 year returns (% p.a.)
10 year returns (% p.a.)
Costs1 (%)
and Costs2 (%)
OSF
Sunsuper3
OSF
Sunsuper3
Option A
0.25
0.09
15.1

6.1

Option B
0.23
0.09
13.0

6.0

Option C
0.24
0.09
7.5

5.3

Option D
0.19
0.08
2.9

4.4

Option E
0.38
0.33
10.9

6.7

Australian Equities
0.12
0.08
14.2

6.5

International Equities
0.28
0.09
24.3

5.4

Listed Property
0.68
0.11
16.6

1.5

Fixed Interest
0.24
0.12
4.4

5.7

Cash
0.12
0.07
2.2

4.1

1 OSF investment costs as at 30 June 2015 (excluding the 0.12% temporary levy to fund the Operational Risk Financial Requirement)
2 Estimated Sunsuper fee for 2016/17.
3 Sunsuper’s asset class returns are indexed option returns.

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link to page 5 link to page 5 Benefits for Employers
Employers will benefit from lower costs in Sunsuper.
•  Administration costs are expected to reduce by around 80 per cent after the transfer.


•  APRA’s share of the investment costs for the assets supporting defined benefits (which is taken into account
in setting unit prices rather than being paid directly by employers) wil  vary based on the asset al ocation for
the defined benefit reserves and Sunsuper’s standard investment fees. Based on current estimates, APRA’s
share of the investment costs is estimated to reduce by about 10 per cent
per annum in
Sunsuper.
In addition, Sunsuper will provide a range of benefits and improved services for employers, including:
•  an experienced client relationship team, including qualified actuaries;
•  an improved employer website with excel ent payrol  functionality and access to an Online Services Team1;
•  on-site seminars and presentations about the RBA  sub-plan  and broader superannuation matters to
employees/members; and
•  regular superannuation newsletters for Payroll/HR.
Name of RBA sub-plan in Sunsuper
The RBA sub-plan in Sunsuper will be called RB Super.
Contractual Agreements
The SFT arrangements are set out in a package of contractual documents: the SFT Deed between the OSF
Trustees and Sunsuper; the RBA Plan Participation Agreement; two Nominated Employer Deeds; and the RBA
Plan Rules. The business terms offered by Sunsuper have been documented in the RBA Plan Participation
Agreement which is effectively the service contract between the RBA and Sunsuper. The key benefit provisions
are documented in the Plan Rules (which together with Sunsuper’s main Trust Deed, would replace the OSF Trust
Deed). The Nominated Employer Deed sets out APRA’s responsibilities in the RBA sub-plan.
The RBA’s OSF Project Team and its legal advisers,
have negotiated the package of legal documents with
Sunsuper, incorporating feedback on relevant documents from OSF Trustees’ legal adviser
and
the legal advisers of the Nominated Employers.
Al  parties have reviewed the legal documents and advised the RBA that they are in order for execution.
Allocation of Fees
Costs for operating the RBA sub-plan continue to be al ocated to the three employers in the same way at present.
Administration fees will be split proportionally based on membership2 and investment fees incorporated in unit

1 APRA payrol  staff attended employer website demonstrations during the tender process.
2 Sunsuper would send administration fee invoices to each employer directly, rather than have the RBA pay al  administration costs
and then bil  APRA and NPA for their shares as at present.
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prices. Employer-funded insurance costs and actuarial costs will be paid from the defined benefit (unallocated)
reserves and so taken into account when setting the defined benefit contribution rate.
The RBA may also bil  each Nominated Employer (APRA and NPA), from time to time, for its proportional share of
additional actuarial, audit, legal, RBA staffing, or other costs which the RBA incurs in relation to the RBA sub-plan.
These amounts are not expected to be large relative to Sunsuper’s administration fees.
Timeline for Transition
The timeline to finalise the SFT and complete the transition to Sunsuper is set out below.
Late June – early July  The OSF Trustees, RBA, APRA, NPA and Sunsuper execute the necessary legal documents with
2016
Sunsuper to implement the successor fund transfer.
Mid-July 2016
OSF members receive initial notification about the SFT to Sunsuper from the OSF Trustees, and a
welcome letter from Sunsuper.
July 2016
Transition from the RBA and Link Super to Sunsuper wil  commence, including:
•  liaison with RBA, APRA and NPA staff on redirection of HR and payroll processes from Link
Super to Sunsuper;
•  review of existing and proposed insurance arrangements;
•  administration system and website development and testing;
•  transfer and reconciliation of assets and administration data; and
•  member education sessions and welcome communication packs.
March-April 2017
Al  members and assets transferred to Sunsuper, and Sunsuper commences administration of the
RBA sub-plan.
April 2017
Policy Committee for the RBA sub-plan established.
Mid-May 2017
New actuarial Benefit Certificate wil  be issued to al  employers to ensure that they meet their
superannuation guarantee obligations.
June-July 2017
Final set of OSF financial accounts prepared and final regulatory returns lodged.
OSF is formal y wound up.

Action
We request that APRA consider the RBA’s and OSF Trustees’ proposed transfer of the OSF to a sub-plan within
Sunsuper and agree to execute the Nominated Employer Deed if it wants to al ow its OSF members to retain their
benefits in the RBA sub-plan after the SFT takes effect.

OSF Outsourcing Team, OSF Section
27 June 2016
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AUSTRALIAN PRUDENTIAL REGULATION AUTHORITY
Level 12, 1 Martin Place, Sydney, NSW, 2000
GPO Box 9836, Sydney, NSW, 2001
| W www.apra.gov.au
30 June 2016
Frank Campbell
Assistant Governor – Corporate Services
Reserve Bank of Australia
GPO Box 3947
SYDNEY NSW 2001
Dear Frank
PROPOSED SUCCESSOR FUND FOR THE RESERVE BANK OF AUSTRALIA OFFICERS’
SUPERANNUATION FUND (OSF)
I refer to your letter of 27 June addressed to Wayne Byres requesting APRA’s consideration
of the proposed transfer of the OSF to a sub-plan within Sunsuper.
Please note that, following a review of your background note and a briefing from
APRA agrees to execute the proposed Nominated Employer Deed which will allow
our OSF members to retain their benefits in the RBA sub-plan.
I take this opportunity to thank the members of the OSF Outsourcing Team for their on-
going commitment to ensure APRA remained fully briefed throughout this project.
Yours sincerely
Geoff Summerhayes
APRA Member

Document Outline