The Epic Retirement Institute and research firm Chant West are increasing the number of criteria in their assessment of superannuation funds’ retirement offerings, as well as the proportion of criteria funds must pass to win an Epic Retirement Tick.

The “tick” method of assessing funds’ retirement offerings was launched by institute’s founder Bec Wilson in early October last year in response to growing concerns that some funds were touting themselves as being “good at retirement” but the quality of their offering simply did not back that up.

Wilson said consumers had no way of assessing how their fund compares to others. The Epic Retirement Tick is a guide; it is not personal advice and it is not a fund recommendation. Wilson said it was also critical that the assessment of funds be carried out by a credible partner, and she chose Chant West.

Chant West general manager Ian Fryer tells Retirement Magazine that the “pass rate” for funds has effectively been increased from 66.6 per cent to 70 per cent, on the greater number of criteria.

“Before, you had to get 12 out of 18 [criteria], and 18 is not a great number, not a special number. But 12 out of 18, two-thirds, that sort of made sense.

“This time you’ve got to get 14 out of 20 – rather than two-thirds it’s 70 per cent, so we’ve actually increased the amount of criteria by two, and also increased the amount that you have to get, by two. We’re not trying to make it easier in any way.”

Some criteria have been revised. For example, there were two performance-related criteria that have been rationalised to just one.

“That’s not so much a watering down, it’s having a stronger focus just on one criteria for that, so we can actually focus on other things so that a fund doesn’t end up getting a tick just because they’re a good performer,” Fryer says.

More difficult at first

Wilson says the changes may make it more difficult for funds to earn a tick in the initial stages.

“There are some new criteria that are possibly stuff the industry is on the back foot on,

[but which] the regulator is saying is important, and the consumers won’t have been speaking this language, they’re not reading the [Retirement Income Covenant], and they’re not understanding it,” she says.

Fryer says one such new criterion is cyber security, where it’s made clear that a fund’s self-assessment isn’t sufficient evidence.

“We knew [cyber security] was important last year, but we thought, how the heck do we measure that? We’re thinking now that there’s different regimes of measuring your cyber security. 

“Some funds do it internally, but some funds do it externally, so they get external certification. So we’re going to be asking, have you had an external certification of your cyber security under one of these frameworks over the last one or two years?

“And if you do that, that goes a long way to getting that cyber piece.”

Wilson says the criteria must remain flexible and adaptable and it’s likely they will be revised annually.

“We have a commitment to keeping up with the times, and retirement is going to move,” she says.

“We had to start at a level, and frankly, not a lot of funds are doing enough for retirement yet, but we thought by setting a bar, they could at least have something to aim for, because even the guidelines the government was putting out a year ago when we started working on this, they were very hazy.”

Fryer says the criteria must reflect the reality of how the industry is adapting.

“We need to listen to the funds,” he says.

“We need to listen to regulators. We need to listen to what the pain points are in the industry. And maybe some of the questions should be on those pain points, because [then] they’re going to fix them. We listen to groups like The Conexus Institute, so we take input from the whole industry.”

Fryer says the timetable is to release the new criteria this month, and to apply them from September this year, to give funds an opportunity to prove they meet the new benchmarks.

“It actually provides a great incentive for funds. They can look at it [and if they’re] a couple short, can address these things over the next six months and maybe get the tick.”

Missing piece

Wilson says the tick is designed to meet a missing piece of consumer education.

“There wasn’t really much on the government side about what a good retirement offering was. So we went, what would a good retirement offering be? And let’s sit down and hammer it out,” she says.

“Most of the awards out there that are done by other players are not transparent, because they don’t want people to game them. Now, I’ll be blunt with you: I want [funds] to game this. I want them to deliver to the consumer the things on the list, and if the consumer gets the benefit, they get the tick.”

Wilson says the retirement tick should not be interpreted as being financial advice – and the institute’s website makes this clear – because advice by its nature is tailored and personalised and the retirement tick is not.

“The best thing we can do is classify and guide with helpful, factual information that people can look at and make decisions of their own; and then teach them the impacts of those decisions and be consistent in our approach,” she says.

“Consistency is key to education. If you don’t have frameworks, you end up saying a lot of things you think that move people, yes, but they move them in a dangerous way, and you don’t become trusted and trustworthy as you do it.”

‘Deeply insulted and angry’

Wilson says the response to the Epic Retirement Tick since its launch has moved from funds being “deeply insulted and very angry” that they had not earned the tick, to a clearer understanding of the benefits to members and, by extension, to funds themselves.

“There isn’t any fund, I think, that still holds hostility over their rating with us that they actually have contested; every single fund has agreed and gone: ‘Yeah, it’s a bugger we don’t get there, but we actually deserve that rating’.”

Fryer says that “every fund that didn’t make it called me up and said, ‘Why didn’t we make it?’”

“But it’s interesting. I met with each of them and went through their criteria, what they get, what they don’t, and in the end, they said, ‘Okay, that makes sense’.

“But they also said, and this is the really good part, we need to work on these areas, and many of them said we are working on these areas. It’s interesting, some of them said, look, we’ve been wanting to work on this, but it’s been hard to get the business case up, but now this makes it much easier to get the business case up.”

Wilson said this was “the first post for the consumer, because in two years’ time, when those projects are being released, or in 18 months, the consumer wins”.

“That’s all I’m here for,” she says. “That’s the end game.”