What will happen is that the whole thing will evolve to an understanding this is a whole-of life solution and there needs to be a natural transition into retirement, not a step jump.” Matterson comments that many funds still have a relatively large group of members with relatively low balances. “So you don’t have the problem of ‘what to do for these guys who might have a million dollars in superannuation and who are more exposed to market events than guys who have $50,000 or $75,000’. “There is a convergence between retail and industry sectors where big retail players like BT and AMP are developing low cost products. They’re moving more and more towards the battleground where industry funds have dominated. And in reverse, industry funds are moving the other way with more flexibility and sophistication, with increasing focus on generating retirement income. At what point will these two industries start to resemble each other in terms of the offerings they have?”

AMP Capital’s Zavone comments that some AMP products take on board many of the issues with target based funds and lifecycle-type concepts that have been experienced in other countries. “There are more sophisticated ways of doing it to achieve better outcomes,” he says. “The cheapest ways are having a good long term value philosophy, and the right sort of asset allocation strategy around that rather than being too short term.” AustralianSuper’s Spear says comprehension is a real issue with protection strategies. “They’re very complex and while they’re certainly appealing for a lot of people who want to engage with them for whatever cost, the next challenge is how do you explain them to people? They are very much a ‘sold’ rather than a ‘bought’ thing.” LGS’s Turnbull says his fund is heading to managing such products internally and that will require fairly simple strategies and some assistance from service providers to put things together, but basically under LGS’ structure is the best viable answer.

“The benefits of a multi-asset approach are that we can do some of the things we’ve talked about, which is to identify where the cheapest and most effective pockets of insurance are across different markets.” Spear comments that the world will be very different in 10 years, and so AustralianSuper is “doing a lot of projecting, particularly for our post-retirement segment about what that’s going to look like and what their needs are going to be,” she says. “So now that we’ve bedded down the defaulting arrangements as a fiduciary, which is our responsibility for both the accumulation and the pension segments, we can say, well, those people who are engaged – and they do get more engaged as their balances grow – what are their needs now and in the future? So certainly we’re looking at the whole suite of offerings.” LGS’ Turnbull observes a scenario-focused approach with some fund managers pushing hard to offer solutions which are evolving.