As the superannuation industry becomes more sophisticated at delivering pension options for an ageing population, we could see the chief retirement income officer (CRIO) emerge.
While chief investment officers (CIOs) have focused on investments to build accounts in the accumulation stage, other aspects of planning, such as consumption in retirement, have not been adequately considered.
“No one has been focusing on the consumption part. No one has been focusing on how the consumption and investment decisions integrate, and no one is doing this in a dynamic manner,” Mine Wealth + Wellbeing CIO David Bell said.
QSuper chief executive Michael Pennisi said his fund’s chief investment officer – Brad Holzberger – often quipped that the investments were the easy part of delivering retirement outcomes to members.
“Isn’t that interesting? Yet the conversation often goes down [that route] of investments,” Pennisi said.
QSuper is a leader in the field of retirement outcomes. The $65 billion super fund for Queensland public-sector workers won Pension Fund of the Year at the Conexus Financial Superannuation Awards 2017.
Pennisi said that based on his experience, solutions to retirement outcomes come through building capacity in people, data, systems and advice.
“It is around how you communicate to members, how you make sure they understand, how you give them advice and assistance all the way through. Every element of the organisation needs to rally behind you [to deliver retirement outcomes],” Pennisi said.
KPMG partner Paul Howes said that for years defined benefit funds have dealt with who should manage sustainable retirement cash flow, and implied that defined contribution funds could learn from the DB experience.
He added that super funds needed to face many questions, including: Who is going to be held accountable when the focus shifts from accumulation to retirement? How will a fund get its proposition right? And which changes to the organisational and operating models will they need to embrace?
A joint report by KPMG and AXS-listed wealth manager and annuities maker Challenger, released in late 2016, found that within many super funds, there was a worrying lack of clarity as to who was responsible for delivering retirement outcomes to members.
The report suggested the evolution of a new executive role – “chief retirement income officer”.
The author of the government’s 2010 Super System Review, Jeremy Cooper, who now holds the title retirement income chair at Challenger, said the CRIO would be the person managing the outflows of the super fund.
“Retirement is very much a retail experience,” Cooper said. “All of a sudden, you’ve got someone who wants something back from [the fund] and the machinery and ideas around that do look different,” Cooper said. “The important people in that world are the ones who are working out how you are giving the money back.”