This article was originally published in the print edition of Retirement Magazine Vol. 3

If you’re going to try to make a difference to how people experience retirement, it might as well be for as many of them as you can. To do that, Jacki Ellis quit the $237 billion, 1.3 million-member Aware Super just over a year ago to join the $410 billion, 3.7 million-member AustralianSuper as the fund’s head of retirement.

While it was clearly a step up in scale, it’s fair to say the fund she arrived at was less advanced in its retirement thinking than the fund she left. The past year has been spent assessing the fund’s capabilities and pulling together the teams and the resources it needs to tackle the delivery of retirement income strategies in a fully joined-up way across different areas within the fund.

“If you want to talk about having an impact, this is the place to do it,” Ellis tells Retirement Magazine. While smaller funds can do an excellent job for their members, Ellis has “deliberately chosen to work for mega-funds because it’s my belief that you need that scale to make the investments required to do these things”. 

“AustralianSuper is large, so there’s a role for everything, and that creates this amazing depth of talent and expertise,” she says. “I get the privilege of not doing this on my own. I have these really wonderful peers at my level and we get to get together and collaborate.”

About one million of AustralianSuper’s members are aged over 50, so if they’re not already thinking about or engaged in planning for retirement, they soon will be. But across the industry, retirement is something funds have done less well than they’ve done accumulation. 

“We have set ourselves up to be accumulation machines, not service providers. It hasn’t been necessary, historically, to have really amazing integrated data platforms that allow you to personalise and deliver help and support and guidance to members along the way. And so we’ve been busy doing that,” Ellis says.

“I think it’s actually easier for a fund like AustralianSuper to do data well, because we have the scale that allows us to invest and do that data integration and CRM system well.”

Evolution, if not revolution

While funds continue to be criticised for making slow progress on meeting their Retirement Income Covenant obligations, it’s clear that there’s been an evolution, if not an actual revolution, in the way they think about retirement.

“When I first started thinking about retirement as this amazingly fascinating problem to solve, it was investment people talking about the objective [being] different for retirees, so maybe we should be investing differently,” Ellis says.

“Then those same people realised the quantum of impact you can have on the member outcome is much larger at the product level than in the discrete building blocks of the investment strategy, so maybe we should be looking at whether products are fit for purpose. 

“And then some products came to market, only to not be taken up by members. And everyone said, you need advice and guidance, because how else will you help members understand what they need? And now there’s a lot of talk about service. Members become so much more engaged in the lead up to and in retirement, but we still haven’t quite got to that point yet where we’re talking about it as one big integrated problem to solve.”

Ellis disputes the notion that funds have been slow or even reluctant to tackle the retirement issue, either because the problem is perceived as too big and too difficult, or because retirement simply isn’t a big enough issue for large parts of their membership.

“It personally drives me a bit crazy, if I’m honest. For me, the real power and success of the Retirement Income Covenant is that it asked funds to research and understand their membership and understand the problem to solve first, before jumping into solutions,” she says.

“And as an industry, we have this horrible habit of just jumping straight into solution mode. There’s a whole litany of innovation failures that have happened in superannuation and financial services in Australia because of that tendency.”

Not the hard part

Ellis contends that the hard part of creating a longevity protection or a lifetime income product is not bringing it to market, it’s actually getting members to take it up. 

“There are some amazing products out there that will absolutely make a huge difference to those members who are using them. But the reality is, very few members are actually using them.”
– Jacki Ellis

“There are some amazing products out there that will absolutely make a huge difference to those members who are using them. But the reality is, very few members are actually using them. So in terms of having impact at scale, or really materially moving the dial for your membership’s retirement outcomes, they’re not really doing that heavy lifting yet.”

For a membership emerging into an engaged state as they near retirement, a strong brand will be a critical part of the mix. 

“It’s… quite distinct from accumulation, where accumulation is underpinned by MySuper and huge levels of disengagement,” Ellis says. “All of a sudden you have really high levels of engagement and a demand-led marketplace.”

Principles-based regulation is the appropriate way to frame funds’ obligations, Ellis says, to allow them to co-create solutions with members and try things out to see what works best. 

“No one across the industry – not even just in Australia, but in a defined contribution sense globally – has nailed retirement to my satisfaction,” she says.

“If the government, who’s so many steps away from the member, were to come out and be really prescriptive about what that should look like today, then you’re just not going to get to as good a place as we can get to over time, through a process of innovation and iteration.”

The complexities of retirement demand that funds deliver guidance and advice alongside products to make the transition as simple as possible to navigate.

“If the system continues to be just horrible to deal with, where you try and do something and you lose the will to live and don’t actually finish it, then that’s a real problem for meeting our ambition to help all Australians live well in retirement,” Ellis says.

“We really want to make sure that we are easy to deal with, that we are removing frictions wherever we can where that’s delivering positive outcomes for members, and thoughtful about where we might want to put positive friction in the system – where we want to help safeguard against switching as much as possible during market volatility, as an example.”

Necessary data

Collecting the necessary data on members to underpin the development of individualised retirement solutions continues to be an issue across the industry, but it is only one issue. That data also has to be accessible and usable in systems that allow funds’ frontline staff to get a full view of a member’s circumstances.

“If you don’t have the data joined up in the right way behind the scenes, it can be quite difficult to follow the bouncing ball between, say, an instance of advice and guidance or some communications, and then what a member has elected to do,” Ellis says. “That’s probably the biggest challenge right across the industry.

“I’ve become really convinced that we can’t really unlock value to the member until we are able to deliver all of the widgets across the key elements of a proposition in a way that… delivers a really cohesive experience.”

Ellis says AustralianSuper’s ambition is to “deliver personalised guidance to every member by 2035 – we’re really, really committed to that, which I think is one of the more ambitious and exciting elements of our retirement proposition”.

That’s still almost a decade away, but it does not mean that members who have already retired or who retire before then will not also enjoy an improved retirement experience before the deadline.

“We’re certainly thinking about the sequence of what we drop to make sure that the things that we’re focused on first are the ones that will have an immediate uplift for the member so we can drop value along the way,” Ellis says.

“It’s not like when we deliver new innovation… those who retired previously can’t also benefit from that. Ideally, those in retirement are also managing their retirement savings in an ongoing sense and will benefit from uplift to retirement and guidance and any sort of evolution in product, structures and service along the way.”