The first two MDUF Research Awards were presented this week to Shang Wu of First State Super and Nick Callil of Willis Towers Watson.

The MDUF Research Awards encourage researchers to use the MDUF v1 research tool and then share their work publicly. They were presented during the 26th Colloquium of Pensions and Retirement Research at the University of New South Wales.

MDUF v1 is an abbreviation for the Member’s Default Utility Function Version 1, which has been designed to represent a sensible set of preferences for a default fund member. A utility function is simply a mathematical representation of an individual’s preferences. Academia has used them for hundreds of years. The super industry has used utility functions to address retirement outcome problems for close to 50 years.

MDUF v1 was developed by a panel of academics and industry professionals to assist the industry in providing retirement outcome modelling. Specifically, the panel considered the question, What is a sensible set of preferences to assume for default fund members in retirement?

It then converted these preferences into a metric that has many applications, including the design of post-retirement strategies, products and services. It can also be used for policy research.

A range of materials related to MDUF v1, including papers, presentations and models is available on a dedicated website hosted by industry bodies the Australian Institute of Superannuation Trustees and the Association of Superannuation Funds of Australia.

The MDUF Research Awards are sponsored by Mine Super chief investment officer David Bell and portfolio manager Michael Berry.

Wu’s paper is titled “The Value of Financial Advice for Australian Retirees” and Callil’s paper (with co-writers Hadas Danziger and Tom Sneddon) is titled “Metrics for Comparing Retirement Income Strategies: A Road Test”.

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