Industry funds face reality of COVID-19 shutdown

The industry superannuation funds for those who work in clubs, hospitality and retail are facing a tough year and have moved to reassure impacted members.

With close to or more than half of their members sitting in the millennial age range, the likes of Hostplus, Club Plus and Rest are likely to be some of those hit hardest by the ongoing COVID-19 pandemic with many, especially those in the hospitality industry, already facing unemployment.

These funds now face a series of challenges at once: their members are likely to be young with lower balances, may be facing unemployment and are likely to be eligible to access $10,000 from their super this year under the government's plan to assist those facing financial hardship as a result of COVID-19.

Rainmaker analysis of APRA data shows 58% of Rest's membership are millennials.

About 58% of Hostplus' membership also sit in the millennial pool, however most recent APRA data doesn't account for Club Super's members which recently transitioned to Hostplus following the two funds' merger. About 44% of Club's members are millennials.

Only 31% of Rest FUM is held by millennials and 25% of Hostplus FUM.

Club Plus' membership is 42% millennial. However, only 14% of its funds under management are held by millennial members.

Military Super (91%) and Guild Super (68%) have the highest proportion of millennial members, and while Military Super members are likely to be relatively unaffected by a potential shutdown, the future of Guild Super members is still hanging in the balance.

Following Sunday's announcement from the government that clubs, bars and dine-in restaurants would have to close many Club Plus members are likely to have been stood down from their jobs and are facing an uncertain employment future.

Club Plus chief executive Stefan Strano took to LinkedIn to share his thoughts on the unprecedented shutdown clubs are facing.

"While the clubs are closed for now, many of the people that make it what it is are ready and willing to work now," Strano said.

"If your business can operate and needs new talent, please message me and I can connect you with the management of a club near you."

On March 20, Club Plus wrote to members saying it had a number of enquiries from clubs about whether members with income insurance could claim if their employer was forced to close due to the pandemic.

"Income protection insurance is not business interruption insurance," Club Plus said.

"Income protection insurance protects our members who are unable to work because of their own illness or injury."

The fund directed members to the government support available.

"Unfortunately, if your employer has closed down or your employment has ceased for any [reason other than illness or injury] you are not covered for income protection insurance," it said.

On March 23, Club Plus instructed members on how they could apply for early release of up to $10,000 from their super if they have been negatively impacted by COVID-19 and the shutdown.

Clubs NSW, co-founder of Club Plus and the peak industry body for clubs in NSW, said this is a devastating time for the industry and the 63,000 people in NSW alone who rely on clubs for their living.

"We expect many employees will be stood down for an extended period of time. Our thoughts are with them today," ClubsNSW said on March 23 following the announcement of the shutdown.

"Clubs have been an intrinsic part of this country's social fabric for over 100 years. The industry played a pivotal role leading communities through the recent bushfire crisis and the drought - in the same way clubs have supported returned servicemen and women since WWI."

ClubsNSW said its focus would be on ensuring that when the shutdown is lifted the industry could resume trading and remain viable.

"We encourage club members to look out for each other in the months ahead, albeit remotely. We are acutely aware that for many people, clubs provide them with their primary social outlet," ClubsNSW said.

"Our message to club members and employees is - look after yourselves and if you need to talk to someone, call a family member or friend, or failing that contact Lifeline on 13 11 14."

Hostplus chief executive David Elia said that the fund has not had many enquiries from members about accessing the $10,000 yet.

"Many members will not want to crystallise current losses by unnecessarily accessing their super accounts so as to take advantage of the eventual recovery in investment markets," Elia said.

"To date we have had very very little, a handful of inquiries.  The scheme does not come into operations until circa mid-April."

He also said the early releases could pose  administrative issues for the industry broadly.

"Many funds are already at full capacity dealing with member inquires," Elia said.

"This new category of early release claims will most likely have to be processed manually which will require some time for fund administrators to implement.  There is also a real and heightened level of risk around this early release scheme arising from identity fraud."

While many retail stores currently remain open the impact of COVID-19 on the sector means Rest members are also facing a difficult year, Rest chief executive Vicki Doyle said.

"Many Rest members work in part-time and casual jobs in the retail industry, so they will be doing it tough in the coming months," she said.

"The government has introduced many important initiatives designed to provide valuable financial assistance as a result of impact of the coronavirus. We would encourage members to consider those options first, and only take money from their super if they have no other option."

Doyle assured members that it is well placed to allow those who wish to access their super to do so.

"Rest has extensive fund assets including cash, and other liquid assets, and we are comfortable about managing our illiquid assets such as property and infrastructure," Doyle said.

"Our active investment approach means over the past few years we have taken steps to help protect our members' super from market shocks such as this."

However, she cautioned that accessing super when markets are down should be a last resort - especially for members with low balances who could be left with no retirement savings and no insurance.

Read our full COVID-19 news coverage and analysis here.

Read more: Club PlusHostplusAPRAGuild SuperMilitary SuperClub SuperDavid EliaStefan StranoVicki Doyle
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