Introducing UniSuper’s Head of Research and Quant Methods - David Schneider

UniSuper is unique compared with most other Industry Super Funds because of our own in-house investment capabilities, boasting more than 25 skilled investments and finance professionals.

This month, Super Informed eNews chatted with UniSuper’s Head of Research and Quant Methods, David Schneider, to understand how this South African-born actuary supports the UniSuper investments team with his actuarial skills and professional experience.

1)    You began your working life in South Africa, what prompted your move to Australia?

Although I was born in South Africa and completed my studies there, I spent 10 years of my working life in Botswana – in the capital Gaborone. For most of that time, I was the only actuary in that country, which was a pretty amazing experience.

I began my working life within the Life Insurance Industry and later founded my own actuarial consulting business in Botswana, where I convinced another actuary along with five actuarial trainees and some support staff to join me.

Starting my own business allowed me to work on numerous and diverse projects, in particular working with the government, pension funds, life offices, and the Botswana Motor Vehicle Accident Fund. I also developed mathematical models predicting the spread of the region’s HIV/AIDS epidemic. On the HIV/AIDS front I wrote several papers on the demographic/epidemiological and financial impact of HIV/AIDS in sub-Saharan Africa, I worked with the UNAIDS reference group to help develop the world-wide model used to project the epidemic and eventually I became the Convenor of the Actuarial Society of South Africa’s AIDS Committee.

In 2002 I diversified my business and started providing asset consulting services to clients. In 2004 I sold my business to Deloitte and subsequently became a partner at Deloitte.

In the mid-2000s, an outbreak of violence occurred in Gaborone. I felt that it was best for my family’s safety and security to leave Africa. My wife and I did a lot of research and decided that both Australia and New Zealand were great options for us – and we wound up choosing Melbourne to resettle our family.

One of the reasons I chose to join UniSuper when I arrived in Australia, is that I believe that the pension products we sell add tremendous value to our members, and I’m quite passionate about the value of defined benefit plans and the unique pooling benefits they provide to members.

2)    Can you tell us about the core differences between Australian and South African superannuation?

In South Africa, the primary mechanism for saving for retirement is through their pension system. Like Australia, there is a level of compulsory savings, but casual staff are generally exempt from participation. The retirement savings program in South Africa is nowhere nearly as extensive as Australia. Upon retirement you MUST use the bulk of your benefit to purchase an annuity. I was quite surprised when I first heard that very few Australians buy pensions on retirement.

Whilst a State Pension does exist in South Africa, it’s very small, so people cannot rely on the same level of government support that we are lucky enough to have here in Australia.

In Botswana, whilst there are corporate pension plans, most elderly people take care of their grandchildren in their village and rely on an income sent to them from their working children. Unfortunately through a combination of high unemployment and the loss of people in their prime as a result of HIV/AIDS, more and more elderly people and children are living in poverty. There’s also only limited social security support in Botswana to provide relief. In one of the HIV/AIDS papers I wrote, I calculated the number of orphans that would need to be cared for within each sub-Saharan country over time…I recall being deeply saddened by the output that the models forecast.

3)    How is the prolonged investment market volatility affecting the UniSuper investments team?

Whilst the sovereign debt problems throughout the developed world (and particularly in Europe) along with highly volatile equity prices, falling sovereign bond yields and an extremely volatile currency continue to cause headaches for all Australian investment teams, these are truly fascinating times to live in.

We’d all prefer to see investment markets move upwards in a nice predictable smooth way, however it’s in these periods of incredible volatility that our training really comes to the fore. Here at UniSuper we all feel the weight of our responsibility to members when it comes to investing your money. We understand that this is your retirement savings and we want to achieve the best possible outcomes for you.

I believe that the structure of our Fund is well-positioned to weather the continued market volatility and I also believe in the quality of our investment team. I consider myself lucky to come to work with such smart people each day.

4)    What does it mean to be UniSuper’s Head of Research and Quant Methods?

My role means that I need to be on top of current investment research. Currently I’m working on how the recent market volatility affects the DBD and to that end we’ve recently implemented an exciting dynamic approach to the Strategic Asset Allocation of the DBD.

I love using quant techniques to build portfolios and I’m really enjoying having the opportunity to help develop the Accessing Asia portfolio as well as the new investment options that are planned for launch in the first half of next year. It’s great being able to develop investment products that one believes in.

5)    What do you miss most about South Africa and Botswana?

Like most people who emigrate, it’s my family and friends that I miss most.

6)    Do you feel like an Australian now?

I certainly feel very passionately Australian and my family and I are now proud citizens. I feel that the cultural differences between Australia and South Africa are not too great. Like most Aussies, I love sport (rugby union), barbeques and… believe it or not…I’m a huge fan of Vegemite!