Cbus has decided against a pre-retirement derisking phase for its default fund, despite surveys showing members wanted this to happen.
The decision is also counter to the trend where Sunsuper has introduced derisking at age 55 and QSuper has introduced seven cohorts for members at ages 40, 50 and 58.
Cbus members would have benefitted from a de-risking processes during the global financial crisis showed research, but this was more than balanced by the losses incurred in up markets.
Tim Ridley, investment strategy manager at Cbus, told delegates at Conexus Financial’s Fiduciary Investors Symposium in the Blue Mountains, that the fund’s member profile was not suited to derisking.
The average Cbus members has an average age of 38, a balance of $31,700, a projected retirement age of 63, while typically seeing little or no pay progression over their careers. The current cohort of members approaching retirement do not have significant balances to protect and the age pension will provide the majority of their income, however Ridley said such low balances would not turn out to be true for younger members.
Another factor in the decision was the accumulation phase having 70 per cent in growth assets and the pension account having 50 per cent, a gap that did not give a great deal of scope for significant derisking, said Ridley.
Research on the risk preferences of members found 67 per cent of those over age 40 wanted their investments derisked before retirement. Switching preferences also showed members have generally moved to lower risk options, a trend that grew stronger after the GFC.