Imagine a super fund that stops fees the moment you take parental leave and that only invests in companies that support gender equality. Well it seems the wait is over and the big question now is, will it deliver for women on ethics and cost?
Verve Super, which is backed by Future Super, has launched today with a promise to challenge the existing superannuation system by helping more women close the retirement savings gap, particularly those who take career breaks to have children.
The launch coincides with a rising trend in financial services to target women through products that go beyond “pink washing” in light of expectations that increased workforce participation will lead to greater wealth, financial independence and demand for products that address problems like the gender pay or retirement savings gap.
But to date the challenge for the finance industry in reaching women has been one of engagement, which has not been helped by some of damning reports of misconduct aired during the recent Royal Commission.
The Financy Women’s Index shows that the average woman retires with 66 per cent of the account balance of the average man, largely to due taking time out of full-time work to care for children.
Christina Hobbs is the chief executive of Verve Super and a former Deloitte management consultant. She joined forces with women’s financial literacy advocate Zoe Lamont to create the super fund with a target of reaching 10,000 members in four years.
“We are hoping to appeal to women who feel under serviced by their current super fund and they don’t know where to turn, and trust is a big part of that particularly given that has been eroded given the issues raised in the Royal Banking Commission,” said Ms Hobbs.
“We want to revolutionise what superannuation means to women. So that will involve education and creating communities to support our members. It also means allowing our members to invest collectively to support companies and industries building a world women want.”
So what’s in the Verve Super offering for women?
Initially Verve Super will offer just one balanced fund option and the investments in this fund will be managed by Future Super Asset Management.
A balanced fund has about 60-80 per cent of investments in growth assets and is generally suitable for young to middle-aged members more so than those closer to retirement age who may want to take a strictly conservative position.
The Verve Super Balance Growth option, which will consists of a 30% fixed interest (bonds), 5% cash, 25% international shares and 40% Australian shares, will observe an ethical framework and screen out gambling, tobacco and fossil fuels companies, as well as those that invest in offshore people detention and the big four banks. The option also excludes companies that “exploit” women in their supply chains.
The investment fee in the super fund is 0.3 per cent based on assets under management plus $1.80 a week to cover administration. This means for a Verve Super member with a balance of 50,000, the total fees they can expect to pay are around $688 a year.
Investment fees generally can range from about 0.1 per cent to 2.5 per cent depending on the type of super fund. For instance, the default MySuper product offered by AustralianSuper charges about 0.66 per cent in investment fees based on your account balance and $1.50 a week for administration.
“We have set that as low as we essentially could,” said Ms Hobbs. “We are not a high cost start up compared to others and we will be seeking investment early next year to keep us going so that we can reach a critical mass.”
One of the ways it hopes to reach that critical mass is by offering a fee pause for members, regardless of gender, on parental leave.
“The reason why we are pausing fees is because when people take parental leave, fees can really erode the balance. The other thing we will be doing is supporting members who want to make spousal contributions, particularly when one parent is on leave.
“This is just one way that we can help close a small part of the superannuation savings gap. We obviously have further support planned that will include advocacy but this is one way to have an impact.”
Verve Super is also working with their fund manager and exchange traded funds provider BetaShares to encourage companies to put more women in their boards and they have set a deadline for March 2019 for that to happen.
Basically whichever funds have not acted will be excluded from the BetaShares international ETF, ETHI. The BetaShares’ Australian based ethical ETF FAIR has already excluded companies without a woman on the board.
Ms Hobbs has a big goal of reaching up to 1-million women through education and free events, which in the current superannuation environment could shake things up a bit and be a retirement-savings game changer for many Australian women.
“We believe the response to Verve Super will be quite strong because we don’t think that anyone is really doing what we are doing for women.”