Deb Ralston

The superannuation industry’s data game – its ability to get data relating to a member’s broader circumstances and use it effectively – will play an important role in helping members gain the confidence they need to spend in retirement, a panel of experts have explored.

According to the panel, which included Deb Ralston, an adjunct professor at Monash University who is also a panel member of the Retirement Income Review, data in relation to the so called ‘third-pillar’ of superannuation (voluntary retirement savings kept outside of the super system) is still not used effectively by many funds.

Ralston joined David Carruthers, principal consultant and head of member solutions from Frontier Advisors, Aware Super group executive Peter Chun and Jeremy Cooper, retirement income chair at Challenger for the discussion entitled ‘Solving the Retirement Puzzle at Scale’ on Friday.

The next instalment of the series created by Investment Magazine in partnership with Challenger will feature Rice Warner’s Andrew Boal, Challenger’s Aaron Minney, Amara Haqqani from Milliman and David Knox from Mercer. This broadcast will be at noon on October 30 and you can reserve your digital pass here.

Superannuation funds including Aware Super use data they have available to make assumptions relating to factors such as home ownership and entitlement to aged pension, Chun noted, adding that the number one objective for super funds is to provide confidence to members in retirement.

Chun said just over half of Aware Super’s members in retirement phase currently draw down more than the minimum prescribed amount, an insight Challenger’s Cooper praised as a positive indication that fund members were switching from saving to spending mode.

“I get the sense sometimes we tell people decade after decade how good saving is and all of the messages in the system about building up savings and that’s the measure of success – I wonder whether the average member really wants to spend that down and just how much encouragement we as an industry are going to give the to do that,” Cooper said.

Home ownership is a really important factor to throw into the mix when you’re thinking about what someone’s retirement income needs are – whether they’re a home owner or not has a really big impact, Ralston said.

While the panel had hoped to use the discussion to discuss the heavily anticipated findings of the recently completed Retirement Income Review, Treasurer Josh Frydenberg has yet to release the document to the public. The broader public policy discussion relating to superannuation has centred around whether the superannuation guarantee will be paused at 9.5 per cent or increased in line with the system framework to 12 per cent.

Sticking to simple messaging, improving measurement of what is success in retirement and getting better data on members’ broader situations are among initiatives super funds need to do more of the give people the confidence to spend in retirement, the panel discussed.

“We need to give members the confidence to spend and enjoy retirement. Exactly how we do that I’m not sure because it is quite complex,” Ralston commented.

Framing drawdowns in terms of how much people actually get as an income is something funds can do better, Frontier’s Carruthers said.

Cooper added that local funds have been slow to provide clarity on retirement income to members, something that has been done more effectively by KiwiSaver funds, the equivalent of MySuper funds in New Zealand.

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