Providing advice to members to think about an income in retirement, rather than taking a lump sum is “making a contribution to their lives”, says Neil Cochrane, chair of First State Super.
Speaking on a panel session at the Conexus Financial Chair Forum on the Mornington Peninsula from January 18-20, Cochrane talked about how chairs could drive strategy for their members’ retirement income needs.
“The vast majority will want to take cash and where we can provide advice we like to think we’re making a contribution to their life,” he said.
For First State Super, the provision of financial advice has been the biggest change and expenditure in implementing its retirement product strategy.
“We have 50 people who do meetings, and we have opened offices, it’s an integral part of how we will move forward,” said Cochrane. “Instead of talking to them about a lump sum our aim is that they will get projected income.”
The panel discussion, chaired by Paul Rogan, chief executive – distribution, product and marketing at Challenger, also included Cate Wood chair of Care Super and Allan Bowman chair of Prime Super. The three funds are at various stages of retirement income strategy and implementation, with Rogan pointing out that between them more than 90,000 people will move into retirement by 2020.
First State was the most advanced, with Cochrane explaining the fund does not have a hierarchy of priorities – rather a more integrated look at the total experience of members.
“Unless we have an effective model of retirement it will undermine the accumulation phase. Retirement strategy is as important to us now as any other part of the business,” he says.
Wood says Care Super has a comprehensive project under way, but Bowman conceded Prime Super needed more focus on progressing its retirement income strategy, with the fund tending to focus on higher account balance members.
Challenger’s Rogan says the recent findings of the Financial System Inquiry reiterated that retirement is complex, has multiple risks and is very idiosyncratic.
However he reminded the delegates, via the findings of the FSI that the purpose of superannuation is “….to provide retirement income”, it’s not about the biggest lump sum or estate planning.