Three years ago, the board of TelstraSuper set a strategic objective of establishing the fund as a leader in retirement income solutions for members. Shortly thereafter, Tim Anderson joined the fund from AustralianSuper as chief customer officer to drive the program to completion.
Today, the fund offers its members an income-layering approach that Anderson says integrates advice, guidance and product, and “really speaks to the retirement income covenant”.
Anderson says TelstraSuper has had a retirement focus almost since its inception, with many of its members having been in the fund for three decades or longer and is a big believer in advice as being integral to delivering retirement solutions.
But about three years ago the $26 billion fund kicked off a program that it intended would place the fund at the forefront of delivering income to members, which Anderson says “looked at the end-to-end solution to try and help with this big, complex challenge of retirement”.
Anderson says the fund’s approach is to offer members choice, so income-layering becomes a feasible and relatively straightforward retirement income strategy.
TelstraSuper tackled the longevity issue for members in retirement by partnering with Challenger to offer a fund-branded guaranteed lifetime income product.
“The way some of these older-style annuities have been considered in the past is it’s really been a choice about do you go down an annuity [path] or do you go down an account-based pension [path], whereas I think the future is really about how do you blend and do that income layering together,” Anderson tells Investment Magazine.
“When we looked at it, the income layering strategy is really key to the overall retirement outcome. Our goal was to help our members get the get the maximum from each of those relevant layers.”
Anderson says some members will be eligible for the age pension, which constitutes a first layer of income, with a second layer provided by the lifetime-income product.
“Then we’ve got the account-based pension, with some specific options developed for members in retirement that manage things like cash flow and income more effectively than in accumulation,” he says.
“What we’re finding is that the age pension and lifetime [income] product give that degree of certainty, and confidence around your daily living expenses, and some of the things that you know you’re just going to need to pay for forever.
“In the account-based pension, you have the appropriate settings adjusted so that can really capitalise on some of the higher-growth assets that are there for the long term.”
Anderson says an important characteristic of the layering approach is giving members the confidence they can manage those layers to adapt to changing circumstances.
“That really speaks to the Retirement Income Covenant, which is all about maximising income sustainability, stability and flexible access,” he says.
Making a virtue out of a necessity
The average age of a TelstraSuper member is 49 for women and 51 for men – around about the age when, typically, a member’s thoughts turn to retirement. The average age of retirement for Australians is 56, according to the Australian Bureau of Statistics.
With a significant cohort of members entering the final straight to retirement, Anderson says the fund must be ready.
“When we look at this Smart Income retirement program there was a number of dimensions to it, and there’s some different elements of products,” Anderson says.
“We’ve got new investment options…that are specifically designed for retirement. We’ve got the lifetime income product. So, there’s that product dimension to it, but there’s also a member guidance piece.
“We’ve got new tools, new calculators, we’ve got a new team of people especially there to help members. We call them guidance specialists, but really they’re to help that pre-retirement cohort with general information about leading into retirement.”
Anderson says guidance to members can also run through to full-service financial advice, delivered by TelstraSuper Financial Planning, a subsidiary of the fund.
“There’s also some digital aspects to it,” Anderson says.
“Our portals…have a totally different experience for those members in accumulation versus those members in retirement, because it’s a different experience. So, how do we help members with the right information at the right time to really help them get the best retirement possible?”
Some members will already have their own relationships with advisers outside the fund and Anderson says TelstraSuper will support those relationships.
“If the external adviser needed some information or assistance, we’re definitely able to support that,” he says.
“We’re very much advice agnostic, if I can refer to it like that. We’re really about what does the member want? And what do they need? And how can we best service and support them?”
More than product
Anderson describes a super fund member’s retirement as “one of those key moments of truth”.
“Many Australians can be passing through the pathway of accumulation, but once you get to retirement it’s important that you do make a decision,” he says.
He says the fund’s retirement income strategy has been “very much focused on how do we nurture those members through to retirement and then help them when the time’s right, and that they’re staying with us?”.
The average member has been with the fund for around 18 years, and Anderson says this sets the fund up for “a strong and trusted relationship to help them with retirement planning”.
“It’s not just about the product,” he says.
“It’s how everything wraps together and around the product that ultimately makes the difference, rather than just we’ve got this new-beaut retirement solution and it’s going to solve all the world’s problems.
“If it was that simple, that would be fantastic, but of course retirement is a whole lot more complex than that.”
This article was edited on 15 April 2024 to clarify that financial advice is delivered to TelstraSuper fund members by TelstraSuper Financial Planning, not by Telstra-employed advisers as originally stated.
