Too hard, says News as it hands over super

The decision to outsource its NewsSuper fund was prompted by a growing compliance burden on corporate super funds, and comes ahead of the July 1 start date for the new choice-of-fund regime.

It continues a trend by companies to outsource their super to third-party administrators and investment managers.

According to the Australian Prudential Regulation Authority, the corporate super fund sector has been declining for a decade.

There were 4161 corporate funds at the end of 1995, 1674 at the end of 2003, and just above 1400 at June 30 last year.

Corporate funds have 984,000 members and $58 billion in assets but many are thought to be financial non-viable, with only an estimated 10% having assets of $20 million or more.

News Ltd's move strengthens its existing relationship with Russell.

News outsourced the administration of the NewsSuper fund to Towers Perrin in March 2003.

Towers Perrin and Russell merged in August last year, and News has now also outsourced investment management, actuarial and other functions of NewsSuper to Russell.

NewsSuper will become a separate sub-section of the Russell SuperSolution Master Trust from March 31.

It will be the default option for News Ltd employees under the choice regime.

News group human resources director Keith Brodie said the company believed it was time to withdraw from super administration.

"We concluded that with the advent of choice and the ongoing changes to government regulation and associated compliance burden, we were better off leaving it to the experts," Brodie said.

The main beneficiaries of the corporate super outsourcing trend have been companies such as Russell, which offer alternatives, such as master trusts, for corporations.

Including NewsSuper, Russell now manages about $160 billion of assets in multi-manager funds, and about $12 billion through its customer service and administration divisions.

The managing director of Russell in Australia, Alan Schoenheimer, said the company had increased its assets under investment consulting advice by $7 billion in 2004.

"This deal highlights the fact that even very large organisations can achieve a sophisticated and cost-effective outsourced solution for their employees," he said.

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