Australia’s largest super fund, AustralianSuper, is planning to launch its own retirement product as close to half a million of members are in retirement or are moving into the retirement phase.
“The sheer number of members forecast to retire over the next decade, that was one of the catalyst [for creating this new role],” Shawn Blackmore, chief officer retirement tells Investment Magazine. “We want to a longevity solution in the market in the next couple of years.”
Blackmore was appointed to the newly-created executive position last November, reporting to the fund’s chief executive Paul Schroder.
With close to 2.9 million members, AusSuper has 100,000 members join their allocated pension product as of December 2022. The fund also has more than 200,000 members between the ages of 61 to 65 years while over 140,000 who have reached preservation in the accumulation phase.
“We’ve been very good at accumulation but we’ve been disappointed with where we’re at in retirement… and our ambitions are to making sure that the members swap into a retirement product,” he says ahead of a panel discussion on retirement at the Australian Institute of Superannuation Trustees’ marque event, the CMSF Conference, held in Melbourne this year.
More product choice
Since July last year, fund trustees have to develop a strategy to help members maximise income, including taking into account the age pension, manage risks to the sustainability and stability of this income and have some flexible access to capital.
The thinking in the industry is an effective RIC strategy needs to address all three objectives and offer members a combination of an account-based pension and a lifetime income product. Prior to 2021, Challenger and AIA were the main providers of lifetime annuities as an option for retirees. However take-up has been lukewarm, in part due to the high cost involved.
Since then, four providers have launched investment-linked lifetime solutions, namely the then QSuper, now Australian Retirement Trust, Challenger, Generation Life and AMP with TAL and the most recent market entrant Allianz with Retire+.
AusSuper has been speaking with different product providers with the view to launch its own market-linked product and then tie up with a third party life insurer to provide the insurance coverage according to Blackmore. “If we put a market-linked longevity product in the market, we’d be leveraging the expertise we have in investments on the market-linked side,” he says.
“On the group life policy side, we don’t have an insurance licence and we’re not looking to get [one] so we’ll be working with the right partner to leverage their licence,”
Blackmore has also been expanding the retirement team whose primary role is product management. He has hired Jon Sedawie, Cbus’s head of retirement join Louise Aracas, AusSuper’s senior product manager, retirement. And they will be working with the product team to help deliver on new products.
Blackmore says more internal work is underway to flesh out a business strategy to execute on the RIC strategy in the next months and this is likely to be firmed up in the new financial year starting in July. Part of the thinking will include “how we measure success,” he says.
“The purpose of the fund hasn’t changed which is how to get the members’ best possible financial position in retirement. How we do it is going to change for the retirement domain but there has to be a measure that we come up around there… I think there is a gap in how we measure success.”
AusSuper has been publicly supportive of most of the recommendations under the Quality of Advice Review that will expand the kind of advice super funds can give to members. “For us, [the QAR] is more people receiving more advice and advice being more obtainable,” says Blackmore.
“If we can remove some of those hurdles and enable people to take advantage of fund advice, not only phone based and face-to-face but digital advice, that would be the only way that we’ll be able to scale up advice offerings and put it in the hands of more consumers.”