No Price War: Sun Life’s Three Plays to Win Semi-Portability

This article is a rewrite of a report from October 2012.

No price war — Sun Life Financial chose to let MPF fund performance do the talking, targeting overall returns 1–2 percentage points above the industry median. In October 2012, on the eve of semi-portability, a Sun Life executive laid out three plays: beat the peers, go digital, and auto-pilot.

Why not cut fees?

One point of extra return beats a tenth of a point off fees. Sun Life’s retirement and group insurance senior vice-president ruled out a price war. Her maths: delivering returns 1–2 points above the median repays members far better than trimming 0.1–0.2 points off fees. And it is not about one star fund — all 14 MPF funds are pushed toward the top half.

What is the digital play?

An online comparison hub with 200+ daily visits. The second play is the electronic platform — notably its wholly owned pensions administrator, whose upgraded online fund-performance platform lets workers compare MPF funds, drawing over 200 visits a day.

How does “auto-navigation” work?

Older members automatically hold fewer equities. The third play is an auto-navigation system that adjusts each member’s equity-bond mix by age to reduce risk. Sun Life had over 170,000 clients, more than 100,000 of them preserved accounts (renamed personal accounts from November); over 10,000 members already used the system.

What is the lesson from 2012?

Fees were not the only battlefield. On the eve of 2012’s semi-portability, the market braced for a price war; Sun Life went the other way — excess returns, a digital platform, automated allocation. For members choosing a trustee, the message endures: one point of extra return can be worth far more than a tenth of a point off fees.