QSuper has given a teasing snippet of its progress in placing default fund members into group cohorts.
This month it moved $21.7 billion of savings for 440,000 members into separate group strategies designed for specific ages, account balance, contribution rate and gender, but has not revealed the nature of each strategy.
The switch has occurred after its members were asked if they were happy to move to cohorts designed to give them retirement outcomes tailored to their current financial status. Only 0.5 per cent have so far opted out.
The move is the next stage in a process that began early in 2013 when members with balances of over $300,000, who were over age 58, were moved into a strategy less volatile than QSuper’s default.
Rosemary Vilgan, chief executive of QSuper said she took pride in being the first Australian fund to offer this level of segmentation to its members and believes the days of a one-size-fits-all default fund are numbered.
“It is very difficult to argue that you should treat a 30 year old and a 60 year old the same, no matter what the economic circumstances or their account balance.”
She said the move met global best practice and will assist in delivering more reliable and secure retirement outcomes.
The move has been interpreted as giving higher risk investment strategies for younger members and lower risk for older members, though Vilgan has denied this will always be the case.
“A more conservative approach to some cohorts does not automatically mean increased risk in others. The risk profiles are based on a combination of factors including assets, interest rates and Centrelink thresholds, for example.”
The last phase of members, involving the fund’s youngest members, will be unveiled in March, when greater clarity will be given around the investment strategies being given for each cohort.