The nation’s two largest super funds, AustralianSuper and Australian Retirement Trust, have back-pedalled on decisions to have dedicated C-suite retirement executives, signalling that funds are rethinking the multi-faceted retirement challenge and the management structure to support it.
AustralianSuper’s first-ever chief retirement officer Shawn Blackmore, who spent 17 years with the fund, departed in October to start his own venture. On Wednesday, the fund announced that Shane Hancock, currently its head of member products, guidance and advice, will become the new general manager, retirement.
Hancock will report to chief member officer, Rose Kerlin, and an AustralianSuper spokesperson confirmed the position replaces Blackmore, which means there will no longer be a standalone retirement advocate in the fund’s most senior management team.
Meanwhile, ART appointed its inaugural chief retirement officer in Kathy Vincent at the end of 2023, but the role was made vacant when Vincent became the chief operating officer in a leadership reshuffle in May.
Investment Magazine understands that ART is not looking to refill the original chief of retirement position, and its responsibilities are now spread across several executives.
An ART spokesperson said the fund’s chief executive, David Anderson, is “ultimately responsible for the ART retirement strategy”.
“The business areas and strategic objectives that previously formed the Retirement Division still remain and the repoint of functions delivers greater efficiencies in the way we service members,” the spokesperson said.
‘Minister without a portfolio’
Chief retirement officer was widely speculated as the next big executive role in superannuation, as more members enter the decumulation phase and the regulators push hard on funds to make progress on the Retirement Income Covenant (RIC). AustralianSuper and ART were two of the earliest adopters of the trend.
However, the exact responsibilities of chief retirement officers are both easy and hard to define, as Nick Callil, former head of retirement solutions at WTW Australia, said the role is all-encompassing.
“For some, it’s a line management role, it’s an operational role, it has functions like perhaps advice, product, maybe even insurance feeding into it,” Callil said.
“Others, it was more of a thought leadership and what I call an advocacy role, to get the organisation on a single page in terms of what it wishes to do on retirement and advocate for that internally and externally.”
The broad merits invite some challenges into the role. Managing partner of executive recruitment agency Alexander Hughes, Michael Swinsburg, said the way the role is currently set up in funds’ organisational structures, a chief retirement officer in some ways is like “a minister without a portfolio”.
“To be truly effective, the role must bring together all parts of the super fund organisation to present a cohesive customer experience for the retiree,” Swinsburg said.
“In many ways, it needs to create a virtual fund that replicates all the same services offered by a full-service super fund – however, tailored for the retirees’ needs.”
Dotted lines
One way of achieving this can be via separating accumulation and decumulation at the investment and business level, Swinsburg said, but he said this method could result in the duplication of some functions and “the argument will be shut down accordingly”. This drawback was first illustrated in a piece Callil penned for WTW Australia on retirement function models.
Speaking of the practicability of funds installing a chief retirement officer as effectively mini-CEO of the decumulation business, Callil said he was unsure “if it would be desirable for funds to evolve in that way”.
“One [challenge] is that it can lead to – or suggest – a siloing approach, whereas retirement has got to be intimately connected with all parts of the member offering,” he said.
“The other thing is functionally, there will genuinely be crossovers. The resources that a chief retirement officer might use to build out the retirement proposition will almost inevitably reach into other parts of the organisation.
“I think there’ll be lots of dotted lines on the org chart.”
Two steps forward, one step back?
The Conexus Institute* research fellow Geoff Warren conceded his initial fear was that the deletion of a senior retirement executive would be a backward move for a fund.
But “it depends on what the fund has put in their place”, he said.
“We wonder whether not having a C-suite executive on the case signals that retirement is not the highest priority, or if it is just a change in how the effort is structured and driven,” he said.
Both AustralianSuper and ART reiterated in their separate statements their commitment to delivering retirement outcomes – which is also a legal obligation under the RIC – despite the organisational changes.
But Warren said the most important thing is that funds are clear on the questions of who is taking responsibility and accountability for the retirement income strategy (RIS), and whether they have enough authority to drive the agenda forward.
The Conexus Institute is of the view that retirement needs to be one of the top two priorities embraced by the whole organisation, and advocates for the establishment of a retirement committee on the board level. Warren said no fund has done the latter yet to his knowledge.
“Board and/or CEO commitment is critical. Developing an effective RIS can work with a strong lead from the to,” Warren said.
“This would then give the authority for any retirement lead sitting lower down in the management structure.
“The need for a strong retirement lead is most relevant for driving RIS in the development phase.”
Callil echoed the sentiment, suggesting the deeper and more meaningful conversation for funds now is how they are creating room to think more strategically about retirement in their organisation.
“Even those organisations that have a designated retirement officer, they may still be working through that structural issue. Appointing or having a person with a designated role might just be a first step in that,” he said.
“A big part of the [chief retirement officer] role is to marshal the beliefs, the thought processes, the appetite for change across the whole organisation.”
*The Conexus Institute is an independent think tank philanthropically funded by Conexus Financial, the publisher of Investment Magazine.
