The $34 billion Brighter Super has appointed insurer TAL to help it develop a retirement income product to complement its existing account-based pension, with the aim of launching early next year and delivering a “simple retirement proposition” to its 280,000 members.
“Poor old lifetime income streams can have a reputation of being complex – and they were, once upon a time,” Brighter Super head of retirement Jennifer McSpadden tells Investment Magazine.
“These days, they can be simpler. We’re targeting the forgotten middle: people who aren’t quite able to get the full Age Pension but haven’t necessarily saved enough to be comfortable it will last their lifetime.”
TAL is one of Brighter Super’s group insurers, alongside Zurich. In 2024, it was appointed by AustralianSuper to help it develop an “income for life” retirement option that the $365 billion fund hoped would supplement the account-based pension it already offers as well as the Age Pension.
In April, NGS Super appointed Challenger to provide it with a group annuity, while TelstraSuper made the same move back in 2023 in what was then one of the first profit-to-member guaranteed lifetime income streams to be offered post the introduction of the Retirement Income Covenant.
The appointments are all representative of a growing trend in the industry, with hundreds of billions in superannuation money currently looking for lifetime income products to build out their relatively thin rosters of retirement options.
Do more
They also reflect a push from APRA for funds to do more to fast-track their retirement strategies, including by partnering with external providers to develop income solutions.
“We encourage you to keep looking at ways to embrace the spirit of the retirement income covenant, and partnering, where it makes sense, with life insurers on longevity products, or with other innovative companies outside the super industry to meet the needs of your members,” APRA deputy chair Margaret Cole told the Conexus Retirement Conference in 2024.
But getting the balance of product and personalisation can be tough, McSpadden says. Compared to accumulation, where a one-size-fits-all approach mostly works, retirement is “a tough nut to crack”. Members need advice, but they also need a relatively simple product that they can come to grips with easily.
“What we’ve found is that when people are overwhelmed by complexity, they often hit a point of inertia where they do nothing,” McSpadden said.
“For some people they’ll want more complexity, but our members tend to have simpler financial needs. They’ve been told what to do all the way along by the trustee and government, and when it comes to retirement we have to help them there as well – not by dictating anything but by making it easy.
McSpadden says it’s “bit of a rude shock” for members to transition from an accumulation environment, where everything is taken care of for them, to a decumulation environment where they have to figure it all out for themselves.
“So, simple is good,” she says.
“Financial advisers have the opportunity to really customise for somebody who has more complex needs. So it’s customising to the cohorts that we know we have.”
Belt-and-braces
Guaranteed income – when used alongside an account-based pension and the Age Pension – forms a belt-and-braces approach that gives members more confidence that they’ll have enough money in retirement. That’s particularly important now, McSpadden says, when Brighter Super’s research is showing that cost of living pressures are contributing to rising anxiety about retirement.
That anxiety is more pronounced in regional Queensland than in metro areas like Brisbane and the Gold Coast, McSpadden says.
“If I’m being honest, that’s something you would expect in some ways,” she says.
“Whenever we’re looking at the great divide between regions and cities, there’s always levels of services and things that aren’t necessarily there.
“People who haven’t retired yet are always more anxious about retirement. They don’t necessarily feel as comfortable; we’ve hit a 10-year low in confidence to retire, and I think it’s all driven by cost of living. But when you leap the fence and go into retirement and live there for about a year, their confidence goes up.”
