US.

The
conference also heard
from
Andrew Robertson,
chief
executive of Ingevity who
agreed
that innovation will
come,
however he urged funds
to
consider the issues now.

“Innovation
will come and
impact
your fund and your
market
share. Do some low
cost
fact-based decision-gathering
now.”
One
fund that has already
moved
down the path is Paul
Souter,
AustralianSuper and
product
manager, marketing
and
communications at
the
fund, said setting up a
retirement
division had been a
long-term
strategic decision for
the
fund.
It
launched an accountbased
pension
in January 2008
after
a period of debate over
insourcing
or outsourcing (it
previously
used Industry Fund
Services’
IRIS product).

People
over the age of 55
account
for roughly 110,000
members
and more than $6
billion
in funds under management
(or
25 per cent of the

fund),
and with the age profile
shifting
in that direction the
decision
to insource was made.
“With
those statistics
we
thought it was remiss not
to
provide for that,” he said.

“The
IRIS product was not
well
taken up and had a lot of
attrition
to other providers. We
had
no control over the cost
and
quality of the product and
matching
it to our membership.
We
were confident in our
own
ability.”

However
Souter said
funds
can not underestimate
the
organisational challenges
involved
in the product shift
as
at the moment all functions

are
set up for the accumulation
phase.
AustralianSuper
built
new
technology systems to
deal
with retiree needs such as
lump
sum withdrawals, and the
desire
to avoid members cashing
out
from the accumulation
account
and moving across to
the
pension.

Coupled
with that is the
financial
challenge of managing
issues
around cross-subsidisation,
to
make sure accumulation
members
do not pick up
too
much of the tab.
Souter
said AustralianSuper
had
factored in a payback
period
of five years for its
investment.
At
the end of December,
2008
the AustralianSuper pension
had
2506 members and
$626
million under management,
or
about 2.2 per cent of
the
fund’s total.

In
future Souter said
the
fund was looking at the
introduction
of a specialist
team
dealing with transition to
retirement
and would bring a
lot
more functions inhouse.
Souter
said: “Administration
efficiencies
will allow
for
product efficiencies and
evolution.”