By
Louise Butcher
THE Military Superannuation Benefits Scheme (MSBS) has turned
around its performance to become the fourth best performing Australian
superannuation fund over the past year.
This is welcome news for members who two years ago saw MSBS returns
plummet after the stock market plunged, resulting in a loss of
about 8 per cent, the worst in the scheme’s 13-year history.
Board member and trustee Air Commodore Lee Roberts said that despite
the downturn in 2002 and much of 2003, sticking to a high-growth
investment strategy had allowed MSBS to rebound successfully as
markets recovered.
Since July 1, 2003, the fund had achieved a return of 13.9 per
cent for the Growth Strategy and 15.7 per cent in the High Growth
Strategy.
AIRCDRE Roberts said that a formal investment committee had been
established with support from professional investment advisers
well known in the industry.
Recognising the uncertainties in investment markets in recent
years, MSBS is using the expertise of the investment committee
to look at other investments that might reduce reliance on stock
market returns and further reduce risk and maximise returns. Possible
examples include toll roads, airports and port facilities.
“The newly formed investment committee meets monthly and
advises the board on new investment opportunities,” AIRCDRE
Roberts said.
“It replaces a system using a primary adviser supported by
the use of second opinions. We now have a greater variety of expert
opinions available to assist us making decisions. You won’t
see the results of that advice for another year though.”
He said that because most military members were younger people
with many years to go before accessing their retirement income,
their money sat in the fund longer than many other funds.
Investment effects were also cushioned by the highly valuable
guaranteed unfunded employer benefit based on years of service.
Owing to these factors, MSBS focused on a long-term investment
strategy.
“This scheme is a hybrid scheme with two components,”
AIRCDRE Roberts said.
“Our pay contributions are invested in the fund and subject
to the fluctuating fortunes of investment markets.
“The second component, and probably most valuable, is the
unfunded employer benefit which is unaffected by fluctuations
in investment returns so you get the best of both worlds.
“Most modern schemes these days are purely accumulation schemes
so all of your money goes up and down with the investment cycle.”
