Nicola Roxon: Good evening, I’m Nicola Roxon, Chair of HESTA.
Thank you for joining us tonight at HESTA’s Annual Member Meeting for the 2024 financial year.
On behalf of the HESTA Board and executive team, I’d like to start by acknowledging the traditional custodians of the lands we are all gathered on tonight, right around the country.
In Melbourne, where we are tonight, that is the Wurundjeri people of the Kulin Nation.
I pay my respects to elders past and present, and to all Aboriginal and Torres Strait Islander peoples joining us tonight.
I’m thrilled to have the HESTA CEO, Debby Blakey, our Directors, Executive team, Auditor and members of our leadership team with us this evening as we present an overview of the results - and some highlights - of HESTA’s 2024 financial year to you.
You will shortly hear from Debby; followed by the Chair of our Investment Committee, Sue Dahn; our Chief Investment Officer, Sonya Sawtell-Rickson; and our Chief Strategy Officer, Sam Harris.
And you will be able to ask questions of our Executive team and Auditor at the end of the formal presentations; but please do feel free to put them in the chat box at any time throughout the meeting.
Any questions we can’t answer tonight will be answered and published on our website within one month of the meeting and please be aware that everything you hear tonight is general in nature and doesn’t take into account your specific financial situation or objectives.
I want to start today by acknowledging what an honour and privilege it is for me personally to Chair HESTA.
I know all our Directors feel the same way.
HESTA’s equal representative Board means that we have Directors who represent the interests of our main employer and union partners, alongside two Independent Directors.
This ensures that the voices of both employers and members are included in the governance of HESTA and provide balance in our decision making.
Over the last financial year we welcomed and farewelled a number of Directors and I thank all of our current and former Directors for their enormous contribution to the Board and to the outcomes we all work so hard to deliver to HESTA members.
And I want to thank you all for entrusting your retirement savings with HESTA. It is our privilege and honour to serve you.
For 38 years, HESTA has existed as a profit to member fund, set up to grow the retirement savings of health and community service workers, so that they can enjoy a confident retirement.
It is our members, and what is important to you, that define HESTA as a super fund.
And the growth HESTA has seen over this period has been enormous.
Today we are a top 10 Australian industry super fund, based on our membership and funds under management.
And that is a direct result of our deep understanding and engagement in the sectors we serve and our relentless focus on the best outcomes for our members.
I do want to touch briefly on industry recognition.
And while certainly not the be-all-and-end-all for HESTA by any means, it is nonetheless an important assessment of the sector at large, and one of many proof points in validating the quality and value of the services we provide to our members.
Last year HESTA received a number of industry award recognitions, among them the SuperRatings Net Benefit Award - which we’ve been awarded four times in the past five years – as well as SuperRatings MySuper Award and the Canstar Outstanding Value for Account Based Pensions award.
We’re working in an era of extraordinary regulatory oversight, which rightly puts financial services companies, including super funds, under much more detailed scrutiny.
And this has meant an incredible rate and pace of change that HESTA anticipates and responds to every day to ensure we are not only meeting regulatory requirements, but continue to meet your expectations also.
Continually developing and maintaining robust frameworks, systems and data has helped HESTA deliver on our corporate responsibilities, so you can have peace of mind knowing that your retirement savings are in safe hands.
Aligned to this work is HESTA’s protection of your personal and financial information.
We are continually investing in data and cyber security measures to protect you, your personal information and your accounts.
HESTA knows that your data, along with your super, is one of the most precious assets you own.
And while the external landscape is ever-evolving, you can be assured that HESTA is also constantly adapting and investing in measures to help safeguard your information.
And now it’s my pleasure to introduce Debby Blakey to you this evening.
Debby has been our CEO for a number of years, and we are incredibly grateful for her enormous experience and skill leading the HESTA team through its ambitious strategic priorities.
Thank you and welcome, Debby.
Debby Blakey: Thanks Nicola and good evening members.
I want to reiterate Nicola’s comments and thank you for entrusting HESTA with your super.
And to say how delighted I am to have this opportunity to present to you, and to answer your questions.
In preparing for tonight’s meeting, I have been reflecting on HESTA’s purpose.
And our purpose is to invest in and for the people who make our world better – you, our members.
We know you take great pride in your work and care about the future we’re creating for the generations to come.
And we know you work in critically important roles that are not generally rewarded with high wages, and often in part time or casual roles with irregular pay.
So we don’t take for granted how hard-earned your retirement savings are or the goals and aspirations you have for your post-working lives.
That’s why HESTA is proud to deliver what we call Super with ImpactTM, the three pillars of which are: supporting our members to face the future with confidence, being a gutsy advocate for a fair and healthy community, and delivering investment excellence with impact.
And in doing that, we firmly believe that your best financial interests will be served.
Sue and Sonya will provide a more in-depth review of our investment strategy and results over the last financial year a little later but I’d like to share two key investment results with you now, and some other data that will give you an insight into how HESTA has continued to prioritise member outcomes over the last year.
Our investment returns are a very important result for our members and in FY24, HESTA’s MySuper Balanced Growth option - where most of our members are invested - achieved a 9.1% return for the financial year.
Looking at this over a 10 year period, Balanced Growth delivered an annual average return of 7.62% over the ten years to 30 June 2024.
And for our retired members, HESTA’s Income Stream Balanced Growth option achieved 10.16% for the year to 30 June 2024.
These financial year returns are well above the annualised inflation rate for the last financial year of 3.8%.
We are very aware that high inflation impacts all Australians, particularly those on low to middle incomes, and we trust that members invested in these options feel a sense of confidence knowing that their super returns were well above inflation last year.
Over the course of the year, we invested a significant amount of time improving how we connect with members to provide the information they want, in the ways they want it.
We know that members want easy access to information, and our online digital tool Future Planner, and the new HESTA app, allows them to do that, anywhere and at anytime.
Last year we saw a 12% increase in members using Future Planner to progress their long-term financial goals, compared to the previous financial year.
And the HESTA app, which was launched at the beginning of FY24, has already had almost 100,000 members use it during the financial year to view account balances, contribution amounts and update personal details.
To complement these, our General Advice sessions with members were also ramped up.
Almost 120,000 members were engaged across all channels with help and advice in FY24, more than double the number from the previous year.
And a final number I want to share with you is our measure of retirement readiness.
At the end of June, 39.5% of our members were considered retirement ready … that’s an extra 196,500 HESTA members who are on target for financial preparedness at retirement compared to when this was first measured in 2016.
Those of you who joined us last year will recall that I spoke about the transition of our administrative services platform to GROW Inc.
This work has progressed steadily during the year and is on track to be finalised in 2025.
And we’re all looking forward to the improved real time data integration capabilities that GROW is expected to provide, which will mean better member experiences and response times.
I mentioned Super with ImpactTM earlier. One of the pillars that underpins this is investment excellence with impact.
And as part of delivering investment excellence with impact, we believe our members best financial interests are served by a deep commitment to responsible investment.
This means we consider environmental, social and governance risks, and opportunities, in our investment decision making.
Over the last year we have engaged extensively with a range of companies we invest in.
For example, we have engaged with emissions-intensive portfolio companies to implement more ambitious climate action plans. And we also met with companies to encourage sound corporate governance practices, to support our members’ best financial interests.
Equally, through the HESTA-led 40:40 Vision initiative, we have led action to increase gender balance in the executive teams of Australia’s largest companies.
And we’re starting to see progress.
The inaugural 40:40 Vision progress report released last year showed that signatory companies are reaching gender balance targets quicker than the overall ASX300.
Another key pillar of Super with ImpactTM is being a gutsy advocate for a fair and healthy community.
And I’m thrilled to say, that after 13 years of consistent advocating from HESTA, the federal government announced in March last year that super will be paid on Commonwealth paid parental leave.
Starting in July this year, Australia’s mums and dads will no longer miss out on these critical additions to their super balances and the compounding returns over decades that will help them retire more confidently.
Before I speak to our FY25 strategic priorities, I’d like to give you a sense of some of our accomplishments over the last year and how we have delivered strong member outcomes.
I have already touched on investment performance and retirement readiness.
Another area that we have delivered on is competitive fees and the value our investment options provide, which our Net Benefit Award from SuperRatings that Nicola mentioned attests to.
Similarly, accelerating our contribution to a more sustainable world for our members to retire into was another priority.
Our responsible investment approach and active ownership of portfolio companies is something we take seriously.
We are committed to the Paris Agreement goals and the transition to net zero carbon emissions across the portfolio by 2050.
And in support of that, we have targeted 10% of HESTA’s total portfolio to be invested in climate solutions, like renewable energy and sustainable property, by 2030.
At last measure in June 2024, these investments in climate solutions made up around 6.7% of the total portfolio, so we are well on our way.
Our members have given us a strong mandate to invest responsibly – in fact, 8 in 10 HESTA members have said it is important that we invest responsibly, and have called out three particular focus areas of health, climate action, and labour and human rights.
Our responsible investment program of work focuses on six key areas of systemic risk and opportunity which are aligned with these three focus areas.
I encourage you to read about this in our FY24 Responsible Investment Report, available on our website.
And now a short update on our priorities in 2025.
It will be no surprise that continuing to strive to improve member outcomes, will be high on HESTA’s list.
While Australia’s super system is rated as one of the best pension systems globally, there are areas of improvement which we will continue to advocate for.
For example, a more equitable approach to tax concessions for lower income earners, and measures to address the gender gap in retirement which still sees women retire with about 25% less savings than men.
And we will continue to prioritise how we support you to be better connected and more informed about your choices.
This is of course important across all stages of your working life, but particularly so for our members approaching, or planning ahead, for their retirement.
HESTA has always taken a continuous improvement approach to meet our members’ diverse retirement needs.
Given our scale, with well over one million members, and more than 165,000 who are likely to transition to retirement over the next decade, we are renewing our focus on the experience of members at this critical time.
We will support you with opportunities to receive advice and one-on-one engagement to support your retirement readiness and help you build confidence to make decisions that are suitable for you.
HESTA’s approach to retirement will see an enhanced focus on retirement data, analytics and modelling to make sure we truly understand our members’ needs.
And these insights will guide future refinements to our retirement offering.
Alongside this focus will be our continued, thoughtful approach to investing your retirement savings.
The investment opportunities of the next decade will be significant as Australia works to transition to a lower carbon future, and super funds like HESTA will play a critical role given our long-term investment horizon and core investment beliefs.
Over the last seven years, we have focused heavily on our internal investment capabilities, systems and data so that we can be at the forefront of these investment opportunities, as well as navigate the challenges and risks that will arise.
I'm now delighted to hand over to Sue Dahn, the Chair of HESTA’s Investment Committee, to talk about our investment strategy.
Sue Dahn: Thank you Debby, and good evening everyone.
I’m delighted to provide an update to you all on the activities of HESTA’s Investment Committee during the 2024 financial year.
As Chair of the Investment Committee, I work closely with the other Committee members and the Board to oversee the Fund’s investment program.
Together, we are focused on enhancing our investment strategy and processes, so that we can continue our proud history of delivering strong long-term returns for members.
We also work to ensure that responsible investment is embedded in decision-making, applying our deep expertise and purposeful capital to help deliver investment excellence with impact.
And our investment excellence was again recognised with SuperRatings’ 20-year Platinum rating for our Industry and Personal Super products, a rating we have received every year it has been awarded.
While we continue to focus on our investment objectives over the next few years, the Committee is continuing to explore thematics, including in the areas of climate change and natural capital, Generative Artificial Intelligence and shifting geopolitics.
All of these will shape markets in significant ways and it’s important that our investment strategy continues to evolve in response.
I’d like to share an example that speaks to the importance of long-term investment performance. Let’s look at a hypothetical member starting with a $50,000 balance ten years ago.
All else being equal, and based on the on-screen assumptions, if they’d received the HESTA Balanced Growth returns over 10 years to June 30 last year, they could be retiring with more than $6000 extra in their account, compared to if they had received the peer fund median return over the same timeframe, based on the same assumptions.
This is the type of yardstick we use to measure our success, to better help our members face the future with confidence.
Debby mentioned “investment excellence with impact” earlier.
The Investment Committee is particularly proud of the incredible work our team does integrating Responsible Investment into our investment decisions.
And our long-term commitment to this contributed to HESTA being recognised as a Responsible Super Fund Leader by the Responsible Investment Association Australasia in 2023, or “RIAA”.
Additionally, RIAA recently re-certified HESTA’s Sustainable Growth option under the Responsible Investment Certification Program, as well as verifying Sustainable Growth as meeting the requirements of a “Sustainable Plus” classification, the highest classification attainable from RIAA!
A key strategic focus of the past financial year has been bringing in-house the asset management for our Australian Equities, Australian Fixed Interest, Cash and Term Deposits.
As at 30 June 2024, we reached 10.4% of assets managed internally, and these funds have delivered positively against their targets.
This has since grown to more than 16% managed internally.
Why are we doing this? Because the cost savings of bringing the management of these assets in-house directly contribute to member net benefit.
Alongside our broader scale benefits this year, our MySuper Balanced Growth Option investment fees fell by another 6.1% during the 2024 financial year.
Thank you for continuing to entrust your retirement savings to HESTA.
I’ll now hand over to our Chief Investment Officer, Sonya Sawtell-Rickson.
Sonya Sawtell-Rickson: Thanks Sue and good evening everyone.
Tonight, I’m pleased to report on our strong investment performance for the last financial year, which saw our MySuper Balanced Growth Option deliver 9.1% and outperform the median fund.
This builds on HESTA’s leading investment performance over time – with our MySuper option achieving top quartile performance, as at 30 June 2024, over 3, 5, 7 and 10 year periods.
This is important because, as you’ll often hear me say, it’s the cumulative long-term performance – year on year on year - that will make a difference to your retirement.
Looking back on the 2024 financial year, there were a few key themes that drove market performance:
As the chart shows, listed equities have experienced high volatility over the last few years.
However, in the last financial year, International Equities showed remarkable growth, with US tech companies particularly outperforming as investors chased the potential of artificial intelligence.
Moving to defensive assets, with a final quarter percent increase in November 2023, the RBA held the cash rate steady at 4.35%.
After many years of declining yields for bonds, you can see how rapid rises in interest rates, to combat inflation, set the stage for prolonged higher bond yields.
Some central banks, including the US, began to cut their rates. Remember though, the US Federal Reserve increased rates earlier and to a higher level than the RBA.
This last chart shows a fuller picture of how asset classes performed across the market.
Property returns have been impacted by commercial property market challenges, and Infrastructure lagged the 10-year average.
What’s also notable is how exceptionally strong share market returns were during the financial year relative to their long-term averages.
So let’s now take a closer look at what all of this meant for our investment options.
I’m delighted to share in this table that our Super and Transition to Retirement Ready-Made investment options performed strongly last financial year.
And importantly in this environment, all HESTA Super Ready-Made investment options exceeded their 10-year inflation-linked investment objectives.
Pleasingly, all Ready-Made options also outperformed their median peers over 3, 5, and 10 years and, in fact, remained top quartile versus peers over 5 and 10 years to 30 June 2024.
This strong absolute performance, and strong historical performance relative to objectives and peers over the long term, demonstrates how HESTA has helped members create a better financial future.
In terms of the actual performance numbers, you can see the numbers across some of our options here.
Focusing on where most HESTA members are invested, our MySuper Balanced Growth option returned 9.10% over the year to 30 June 2024 and an annualised 7.62% per annum over the 10-year period to 30 June 2024.
You can also see returns for the other options members are primarily invested in on screen.
As for our Retirement Income Stream Options , the theme is very similar.
Retirement Income Stream Balanced Growth Option returned 10.16% for the FY23-24, while the Retirement Income Stream Conservative Option delivered 6.03% over the same time frame.
Both these options delivered returns above their 10-year peer median and inflation-linked objective.
Debby talked about Super with ImpactTM earlier, which we know is as important to members as strong long-term returns.
I’d like to share an example of how this aligns with members’ best financial interests.
Coming out of research in an internal innovation challenge, we invested into ClareMedica, a US company that operates health clinics focused on improving patient outcomes through holistic care.
Its emphasis on preventative medicine versus reactive, fee-for-service treatment has seen a reduction in emergency room visits and average length of hospital stay, reducing the burden on health care staff and improving patient outcomes.
HESTA was selected as a preferred investment partner given our purposeful capital position - championing innovative care models and growth - to help create value and support long-term returns for our members.
Investments like these can provide insights to improve both the working lives and financial outcomes of our members in Australia.
To close, I want to share how we’re prepared for future market conditions.
Elevated interest rates remain a driver of cost-of-living pressure, and even with the US lowering rates and hints that the RBA may follow, we’re paying close attention to lingering recession triggers.
However, opportunities are always emerging. Ongoing challenges, such as geopolitics and climate change, are building support for their solutions, including reshoring manufacturing and the energy transition.
We are of course also monitoring the return of Donald Trump to the US presidency, and have modelled scenarios for what effect policy changes will have on these opportunities and markets more broadly.
In addition, AI may deliver productivity benefits which enhance company profit margins and deliver long-term economic growth. We continue to seek opportunities within these areas where the pricing is supportive.
Whatever the market delivers, we will continue to actively take advantage of opportunities and adjust to emerging risks.
This will ensure we are well-placed to deliver the long-term investment objectives to help you face the future with confidence.
And finally, I want to thank the investment team at HESTA for their incredible collaborative work in supporting these outcomes for members in FY24.
Thank you and I’ll now hand over to Sam Harris, our Chief Strategy Officer.
Sam Harris: Thank you, Sonya.
I have the privilege of sharing a bit more about how we support you to face your future with confidence, as Sonya just mentioned.
We’re always thinking about new ways to do this. Whether that’s helping you explore how to boost your super balance, or to understand your retirement options… or to find lost super, or even just to understand how super works.
Some people like to explore this information through our app, or learn through an interactive video, while others prefer a chat over the phone.
And for some, in-person support is best, either at your workplace, or attending our information sessions run across the country.
More than 48,000 members either attended one of these or received one-on-one advice from our team in the past financial year.
And our pre-retirement and retirement seminars, which help you better understand what life after work could look like, had more than 8,000 registrations over the course of FY24.
In the same period, our digital Future Planner tool was used by over 68,000 members.
The recent upgrades to Future Planner let you see what your retirement savings would look like if your situation changed – for example if you increased your contributions, or adjusted your investment strategy.
It then points you to further advice and support based on the different scenarios, helping you plan and hopefully increase your confidence around your long-term financial goals.
However – we know that many of you may be currently more focused on the short-term, especially with increasing cost-of-living pressures.
And for some, this might mean applying for early access to your super.
In the past three financial years, we’ve seen an increase in members accessing their super early for financial hardship and compassionate reasons.
So we’ve prioritised improving the financial hardship claims process.
Simplifying the eligibility requirements and process now means there’s less time and effort involved when making a financial hardship claim.
This means we can process your applications faster, and importantly, you can receive your funds quicker than before.
We’ve also been exploring how we can better customise our products and services to provide early support for members who may be at risk of facing financial hardship.
Our insurance offering was also improved this past financial year.
We took steps to simplify the claims process, improve the Insurance Portal and we launched a pilot, to help fast track the assessment timeframes.
In the pilot, the average time to reach a claim decision reduced by half, at around 7 days, with the fastest decision being made the same day the claim was submitted.
As part of the portal improvements, our insurer AIA added real time tracking of members’ insurance claims, removing the need for members to phone or email for an update.
I hope this overview has provided an insight into the ways we’re helping you get the most out of your super, so you feel more confident about your financial future.
I’ll now hand back to Debby Blakey before we move onto our Q&A session.
Debby Blakey: I want to thank you all for joining HESTA’s Annual Member Meeting tonight.
It’s been an absolute pleasure to present the FY24 year in review and strategy update to you, and I want to reiterate HESTA’s commitment to supporting all our members to retire with confidence.
We’ll now go straight to our Q&A session, which HESTA Chief Operating Officer Stephen Reilly will moderate for us.
Over to you, Stephen.