HESTA members to keep paying fees as disruption continues

HESTA members currently in the midst of an extended limited services period will not see a pause or reduction applied to their administration fees, the fund confirmed.

The $89 billion fund is currently transitioning to GROW Inc. (GROW) for its administration services - a process which began on April 12 and isn't expected to end until June 2.

A HESTA spokesperson told Financial Standard that during this time members are still paying admin fees and, even when the transition is complete, fees will not be lowered.

When asked how continuing to charge admin fees during such a lengthy limited services period was in members' best financial interests, the HESTA spokesperson said the move is "expected to help keep costs down in the long-term for members".

Still, members and financial advisers have been left frustrated.

"I have seen large back office overhauls many times in my career, it's never involved freezing anyone's money for any period of time," Lythgo Crew Wealth Management senior financial adviser Dane Windshuttle said in a LinkedIn post.

Meanwhile, Zeal Wealth's Leslie Brown wrote: "Trying to gather information from HESTA and immediately met with an auto generated excuse that they are running less team members while they update their systems. Not to mention the wait time... Cannot give a simple account balance or update details for their members until June 2."

The HESTA spokesperson said the fund has been doing everything it can to ensure members still have access to services.

"We're continuing to support our members through this period of change as we know that, while in the short-term it may be challenging, this transition will provide the technology platform and data capabilities to better service our members in the years ahead," they said.

"Our contact centre and member engagement teams are actively supporting members with their queries. While there are temporary disruptions to some services, it's important to note that members can still receive urgent and critical payments, and switch investments during the limited services period."

The super fund said it is "confident" the change will help it deliver better outcomes for members, allowing for more personalised experiences that would make it easier for them to manage their super.

"The transition to GROW will provide faster, customisable technology and access to better, real-time data that can support us and our partners in providing more personalised and adaptive experiences for members over time," a HESTA spokesperson said.

In addition, the fund said that the timeframe of more than two months was necessary for such a large-scale project.

"This is a critical phase of the project, designed to ensure the safe and secure transfer of our one million-plus members' accounts," the spokesperson said.

When Australian Ethical (with 134,000 members) transitioned to GROW last year, it had a limited services period of around seven weeks, between 17 September and 4 November 2024.

When Australian Ethical reported its quarterly results in January of this year, the fund noted that the transition period impacted its ability to "promote and generate new superannuation business at our normal rate".

NGS Super announced in January 2024 that it would transition to GROW and the transition was expected to be complete by year end. That transition has not taken place, and Mercer is still listed as the fund's administrator.

GROW did not respond to requests to comment from Financial Standard.

When asked about the long timeframe, the HESTA spokesperson said that due to the complexity of the change, the longer time period was necessary.

"We are transitioning more than one million members across to a new service provider and technology platform and are focused on the safety and security of member accounts at every step," HESTA said.

"We have also established and are integrating a new contact centre, digital services and mail house to ensure ongoing support, advice and communication with members."

The spokesperson added that all transitions of external administrators involve different challenges depending on the scale, technology platforms and operational requirements.

"In this case we are facing all three of those challenges concurrently, and we are confident the uplift will help deliver better outcomes for our members," the fund said.

Commenting further, HESTA's spokesperson said in recent years the largest industry movements have been successor fund transfers (SFTs), which "even in their most complex form are simpler and faster to execute than a full administration service provider change".

"In a full transition, years of data is transferred across, and there is more complexity in managing incoming and outgoing service providers as well as business continuity through these changes," the spokesperson said.

"In an SFT, the fund is closing and therefore they are transferring the account balance and some product matching - which means a lot less data to manage safely."