Australian Catholic Super has launched a account based pension product based on a bucket strategy, offering members a simple and accessible solution which tackles the risks associated with longevity.

Similar to solutions used by financial planners and Equip Super, the product works by investing a member’s account balance into two buckets: cash and growth. The cash bucket provides a minimum of two years’ worth of pension payments, while the growth bucket allows for capital growth, increasing the likelihood of pension income lasting longer into retirement.

Funds are automatically redistributed between the two buckets and members do not need to actively manage the allocation of their investments.

Designed in consultation with Rice Warner, extensive modelling was carried out to ensure the product addressed longevity issues, including risks associated with a significant market downturn.

Greg Cantor, chief executive of Australian Catholic Super, said: “Our modelling showed that the two years’ worth of pension payments stored in the cash bucket would provide an adequate safety net in the event of a significant market downturn.”

He added RetireSmart is a pre-packaged solution focused on making members’ account balances last as long as possible into retirement, designed to generate a consistent stream of income during retirement while continuing to grow savings.

RetireSmart complements Australian Catholic Superannuation’s existing long established and successful account-based pension product which has been renamed RetireChoice. Both account-based pensions are available as part of a transition to retirement strategy and to fully retired members.