Equip is targeting retired ex-members in self-managed super funds (SMSFs) with its new MyPension product and also hopes to offer it on a white-label basis to others.
In its first major product launch since MySuper, Equip has focused on meeting the needs of the high proportion of members in its fund who are approaching retirement with large balances – a quarter of the fund is aged over 50. It also wants to offer it beyond these members in order to ensure scale and low fees.
MyPension splits assets between growth, balanced and cash options and is calibrated to give drawdowns in a way designed to optimise the likelihood of balances lasting until members are aged 90.
Danielle Press, chief executive of Equip, said the fund was prepared to white label the product for other funds or providers regardless of any opportunities this might lose in marketing the Equip brand.
“I care more about the right product to the member be they our member or anybody else’s member and having the scale that sits underneath that to be able deliver that at a cost and an efficiency that makes sense,” she said.
The asset allocation split into cash, growth and balanced investments is a strategy favoured by financial advisers for individual clients and as such it will be directly targeted at members in their 70s who had left to run SMSFs, particularly where the partner who drove the move to an SMSF has since died. Equip has a financial planning group that is able to wind up SMSFs to assist in the exercise.
The product is also designed for members of Equip’s defined benefit plan who receive a lump sum on retirement.
It also factors in the paucity of general advice for members.
Press said: “We know that less than 20 per cent of members will seek advice. We would have to have five to six times as many planners in the country to give advice to our 52,000 members at the same time and that is not realistic.”
The move coincides with Equip opening its first interstate office in Sydney, which will be managed by financial planner, Kristine Spiteri.
Equip’s retirement product has come in advance of several other funds who are also innovating in this space, according to Rice Warner.
The actuarial firm is conducting workshops for funds which want to understand the issues facing members and the range of potential solutions and is working directly with several to develop solutions.
Michael Rice, chief executive of Rice Warner, said: “A common theme is the development of a default structure with good choice options backed by some guidance for members through cost-effective advice.”