Some research, for instance, points to the size of a member’s super balance, rather than his or her age, as a more logical trigger point for switching to more conservative investment options. With average life expectancies improving all the time and people spending longer in retirement, there may be danger in implementing a defensive strategy too early. Even after taking into account the ravaging effects of the global financial crisis, the average not-for-profit default fund (where exposure to growth assets is typically about 60 to 70 per cent) has served its members well. But there is certainly room for improvement, particularly in the area of member education and advice. Indeed, improving member access to financial advice may turn out to be the best strategy of all. The members of any default fund are a diverse group of people with a broad range of risk-profiles and investment horizons. The 60-year-old who owns his own home plus another two investment properties, for example, may have a very different tolerance to risk than a 60-year-old with a small super balance who is still paying off his mortgage.

Older members, in particular, need to be encouraged to think about their super and whether or not it is invested appropriately. It stands to reason that education about alternative investment options available within a fund is important to assisting member to understand what their choices are and what impact their choices could have on end benefits. AIST sees a role for Centrelink in providing free or low-cost financial advice on superannuation and retirement planning for low-income earners. This could occur through the enhancement and expansion of the services currently offered by Centrelink’s financial information service offers. We also believe it is time for the government to consider a capped tax deduction on financial advice when it relates to super.

For many Australians, super is now their biggest financial asset outside the family home. For some, it is their only financial asset. While it’s true that many of these people are disengaged with their super, we also know that as members’ balances grow, so does their appetite for more financial information, advice and contact from their fund. Interestingly, my 50-year-old friend is satisfied with his fund’s lifecycle strategy, even when hindsight indicates his super balance would be roughly 2 per cent larger today had it remained in the more aggressive fund. He reasons that it is difficult to time investment markets, that the markets could have gone either way, and that he has many years to go before he plans to retire. He reminds me that he likes sleep at night and that he slept pretty well last year.