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AustralianSuper now doing the heavy lifting for retired members
There is still much confusion in the retirement space when it comes to drawing down, instead of saving, for the golden years. AustralianSuper chief retirement officer Shawn Blackmore (pictured) says that while he is impressed by the increasing levels of financial literacy that members approaching retirement have, there are still worrying gaps.
Blackmore, a member of a very elite club of chief retirement officers at Australian superannuation funds, expects the number to grow over the next five years as more funds realise the importance of having somebody with a clear focus on members’ income needs in retirement.
“It’s a privilege to be in this club [but] I would be surprised if every medium to large fund doesn’t have this role in the next five years,” he says.
AustralianSuper members have an allocated pension product they can transfer to in retirement but by the first half of next year they will be able to invest in a lifetime income product that will do exactly that – provide an income for life. [AustralianSuper has partnered with life insurer TAL to provide this product.]
“The objective of that lifetime income product is to meet the needs of those members who have a fear of outliving their money,” Blackmore says.
“The way those products are assessed will be important for some members with higher account balances that might give them eligibility for some further age pension entitlements.”
Under the age pension rules, only 60 per cent of an investment-linked annuity type product counts towards the means test.
As it develops the product, Blackmore says it is important to keep it as accessible as possible both in terms of cost but also features.
“We want to keep the product features as small as possible, because we find in these types of products, the more and more features you add, the more complex it’s going to be,” he says.
Overall, Blackmore has noticed a growing sophistication in the types of questions relating to retirement that members ask.
“When I listen to call centre conversations now, it’s not about ‘what’s my account balance’ or ‘what’s my membership number’. It’s all about ‘I’ve read and learned about these things’, and they’re seeking validation that they’re on the right path. [These are] fantastic signs that people are buying in and self-educating,” he says.
The fund has launched the content hub ‘Elements of Retirement’ on its website that deals with important modules to help people prepare for, and then move into, retirement.
“The last module, being around lifestyle and well-being, and that’s been so well taken up by members in retirement as they look to understand what some of the other challenges they will face in retirement. And what we’re hearing more is success in retirement comes down to the two Ps. It’s having a purpose and having a plan,” Blackmore says.
AustralianSuper pays about $4 billion to members in pensions each year but expects that to grow rapidly as more Australians retire over the next decade. As they do, education will become increasingly important. And while Blackmore notes that financial literacy is improving, some fundamental misunderstandings remain.
“One of the frightening numbers I’ve seen internally was 20 per cent of members, when they applied for an income with AustralianSuper, assumed that [we’re] applying for the age pension for them,” Blackmore said.
“[That] highlighted a really important demand point for us, that members, in some respects, expect us to help them more in not just the income they receive from the fund, but potential eligibility for income elsewhere.”
He is optimistic about the potential for AI to help Australians with advice around retirement.
“We’ve spoken as an industry for a long time about how we can scale advice. We had a terrible definition of ‘robo-advice’ 10 years ago, which had the concept right, but the technology wasn’t quite there. But I look now at the possibility that AI allows us, and I really think we’re a lot closer to being able to scale digital help and guidance and advice to make it accessible to all members.”
AustralianSuper has already adopted AI for some internal practices with its centre of excellence teaching employers how AI can help with efficiencies in their work.
“Over the next 12 months, I’d say we’ll start to pilot a couple of little things in the background and to see what application they have,” Blackmore says. “I think that would be the big opportunity for funds going forward, to look to see how we can more and more digitise that next step to make it easier for people to move into retirement.”
