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Super funds finally upping the ante on retirement solutions

For 30 years, it’s all been about accumulation. But the Retirement Income Covenant has changed the game, and super funds are now having to give their members retirement solutions. Some are doing it better than others.

Ever since the introduction of the Retirement Income Covenant two years ago, super funds have been required by law to prioritise the retirement outcomes of their members.

Thirty years with an accumulation focus have made it difficult for some funds to change their mindset, but others have responded to the challenge, appointing chief retirement officers or retirement solution leads and adding to the range of products they offer retired members.

The $280 billion Australian Retirement Trust (ART) appointed Kathy Vincent (pictured) as its first chief retirement officer in June last year. They also launched a group self-annuitisation (GSA) solution – called the lifetime pension – in March 2021.

  • “For our members to actually achieve their retirement goals we need to be there for them in the moments that matter, and we think of it in its spectrum of advice, guidance and education,” Vincent told The Golden Times.

    The lifetime pension was developed via ongoing market research and design, as well as the Government’s cross-agency process for innovative retirement income stream products, offering a retirement income stream that “never runs out”.

    Since its launch, the fund reports more than $250 million in lifetime pensions have been bought and it has been recognised locally and internationally with awards, including the Best Plan Design Innovation at the Pension & Investments World Pension Summit Innovation Awards.

    “[It is] a really important component to how our members can actually think about how they support themselves in retirement,” Vincent says.

    She explains that by providing members with various retirement tools they can optimise their retirement outcomes.

    “We are investing in digital advice journeys, so that enables our members to actually do a little bit of self-solving, especially when you combine that with more sophisticated calculators as well as apps. So, we have a core belief around hybrid advice,” Vincent says.

    UniSuper appointed Giacomo Tarantolo as lead, retirement solutions, in August last year, and he says the fund “wants to be the Netflix of retirement”.

    “I think the difference with UniSuper relative to other funds is that retirement is in our DNA. UniSuper was set up as a defined benefit pension fund,” he says. “As such, we have been investing to provide our members an income in retirement for 40 years,” he says.

    The $124 billion UniSuper has been offering its members a lifetime income solution since 1998 when it stopped providing its defined benefit indexed pension option to all members.

    UniSuper starts communicating with its members about retirement as early as 50 with automated nudges that continue all the way up until 66 and a half.

    “My favourite one is when they’re 66 and a half. When a member turns 66 and a half, we send them a nudge focused on the age pension [and tell them that] in six months they could be eligible for it. We’ve partnered with a third-party provider called Retirement Essentials [and they] help members apply for the pension and other government benefits,” he says.

    For a cost of between $296 and $850, depending on how complex the member’s financial situation is, Retirement Essentials will act as a nominee for the member and complete the pension application process for them.

    The $83 billion HESTA super fund has also partnered with Retirement Essentials to help its members apply for the pension, with chief strategy officer Sam Harris saying it is a great service.

    “There’s lots more that we can do in that space around working with a network of partners and understanding that we all play a role in helping people achieve their retirement goals. One thing that’s quite great about Retirement Essentials is that you don’t need to be aged 67 to get a bit of an idea of what you could be eligible for in the future,” he says.

    HESTA’s retirement strategy focuses on innovative ways to provide help and guidance to its members at scale that also suits their needs. With a membership that is 80 per cent female it also cognisant of the specific challenges that women face.

    “More than 300,000 of our members have used digital technologies to engage with their super in the past. That includes 100,000 members using our new app, which we launched in July last year, and then 200,000 using our unique future planner tool,” Harris says.

    Future planner helps members examine how different actions, such as increasing contributions, adjusting investment options, or changing retirement dates, might affect their retirement outcomes.

    Most industry funds are hopeful that the Quality of Advice Review will give them more power to provide meaningful advice to their members around optimising their retirement outcomes.

    “It’s really important to highlight that we genuinely believe that funds should be able to assist members in a more meaningful way with a broader ability to provide ‘advice’,” Harris says.

    Funds are also trying to provide value adds to members in terms of how they make the psychological and emotional transition to retirement.

    UniSuper, for example, says it can leverage the expertise of some member academics from various universities and their extensive research into improving retirement outcomes.

    “We’ve introduced a new three-part video series on the mastery of retirement, and we’ve engaged a psychologist, Humphrey Armstrong, and he talks about the psychological aspects of retirement, like how to have a happy, well-adjusted retirement,” Harris says.

    ART is also creating several education initiatives in this space to help members better understand these key areas of retirement preparedness.

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