Such is the nature of memory in Australia’s superannuation system that, in the long and increasingly brutal admin debate, the name “Superpartners” has not been invoked once.
Founded in 1983, Superpartners was an industry fund-owned administration platform that, at its height, handled 6.3 million super accounts across 700,000 employers totalling $80 billion in assets. But, towards the end of its life, Superpartners was described in the media as “hapless”, a “tech debacle” and a “noose” that was “tickling the throats” of the five funds that owned it. By late 2013, those five funds – AustralianSuper, Cbus, Hostplus, HESTA and MTAA Super – had tipped nearly $300 million over six years into an IT upgrade known internally as “NextGEN” and externally as “botched”.
Eventually, they’d had enough. Superpartners was hocked to Link Group, the country’s largest superannuation fund administrator, for $170 million in September 2014. Meanwhile, Superpartners owners and customers separately negotiated new administration deals with Link.
Ten years later, they’re trying to get out of them.
In mid-2023, HESTA announced it would shift its administration contract from MUFG – which bought Link in 2023 – to upstart provider GROW Inc (while the date for completion was set for late 2024, the transfer is still ongoing). Following the highly public failure of member-facing administration services – including a period of outages in 2023 that prevented some members from accessing their accounts – AustralianSuper has handed its insurance claims handling and call centres to new providers and wants to bring phone-based advice in-house (it’s retained MUFG for “basic services”). Cbus, which tried to shift responsibility to MUFG following its death benefit and TPD payout debacle, declined to comment on whether it was reviewing its admin arrangements, saying it was still working with the regulator.
How has it come to this? On the part of Link, observers point to years of underinvestment in its own tech stack, as well as the distractions of regulatory woes and an on and off-again sale/takeover/merger process that ultimately concluded with Link being acquired by MUFG. There’s been significant turnover in its contact centres – noted in ASIC’s statement of claim in the Cbus case – and it’s struggled to achieve proper resourcing.
‘They worked fucking hard’
But that’s only half the equation. Ask anybody how Link performed through the Covid-19 pandemic – when it was tasked with making sure billions of early release payments went out on a tight schedule – and they wouldn’t fault them. When Link’s technology and systems were pushed to their limit, they didn’t fail. The staff in its service centres worked “fucking hard”, according to one former employee, and “knew their stuff”. Other observers say Link’s cyber security offering is excellent and the business remains very good at handling contributions.
But Link’s inability to answer existential questions about its own business was deeply problematic, even for those who defend its record. It tried to own and do too much. Its technology is solid, but more is now being demanded of it. And there’s an abiding lack of alignment between Link and the funds it services that can be traced to the cost imperative. Regulatory pressure on fees means where industry funds can save a dollar, they will. Link, and almost all administrators, are always under pressure to do everything cheaper, faster and better. That’s no way to get high-quality administration services.
And even if all the damage could be traced back to Link, super funds have been slow to protect themselves against it.
Cbus knew there was something rotten in the state of its outsourced claims handling process but, according to ASIC, failed to “promptly and properly identify” the risk it posed to its members. In AustralianSuper’s latest skirmish with ASIC, which has seen it dragged back to court for failing to pay out death benefit claims – sometimes with delays of up to four years – the regulator said appropriate corrective action would have included terminating its agreement with Link.
In all of this, the Superpartners debacle is illustrative. In trying to claw themselves free from that “noose”, it seems to have only gotten tighter, and superannuation funds now find themselves facing another big decision that will decide the shape of administration for the next decade.
They could encourage Link to invest more deeply into its business, with a follow-through impact both on their own fees and the bottom line at MUFG; throw in their lot with another administrator (with no guarantee that would fix their problems); or do more of it themselves.
It’s not clear yet which is the best option. There is some evidence those funds that have in-housed their administration, like Aware, are pulling ahead after significant upfront costs. Having the contact centre outside the organisation means it’s harder to get answers; small funds like First Super, which owns its administration platform, can boast that it takes less than three minutes for a member to hear a human voice.
Whatever the case, something needs to change. Service standards aren’t aligned with the compulsory nature of the system; if a member is required to contribute 11.5 per cent of their income to superannuation and pay fees from that for its management and administration, they should at least be able to get answers to basic questions and access their money when tragedy strikes. That this is not the case – a decade after Superpartners was sold – speaks to system-wide inertia and underinvestment in administration.
When those five funds finally offloaded Superpartners, they no doubt breathed a sigh of relief. But that was just the start of their troubles. Let’s hope we’re at their end.
