Super funds should consider new products
Funds must consider if new breeds of products can better meet retirees' needs and not fall into temptation of familiarity, Towers Watson believes.
The global professional services company said navigating options for a member's retirement phase remains a key challenge for super fund trustees, given the enduring focus on providing sustainable retirement incomes.
Towers Watson Australia head of retirement income strategy, Nick Callil, said "Given the range of retirement products and strategies available, the multitude of different risks and preferences that mater to retirees, and complex implementation issues, it is little surprise that no universal solution presents itself".
Callil said as innovation continues to occur in the product market place funds need to consider new products that can better meet retirees' needs.
"As funds develop greater internal resources there are a number of strategies which can be developed by funds themselves and offered without the need for a third-party provider, which may also warrant close consideration," Callil said.
He noted a key obstacle is the complexity of comparing retirees' outcomes with products that have diverse features, return drivers, and pay-off profiles.
"As the product marketplace becomes richer and more diverse, a robust means of comparing products against members' objectives is essential," he said.
"Funds need to be able to demonstrate why they have selected a given product suite, and how these products will deliver outcomes that meet members' income, stability, and liquidity needs."
Callil said Towers Watson's newly launched Retirement Strategy Appraisal (RSA) framework condenses possible objectives retirees may have for a retirement product or strategy into a manageable number which makes the next step of assessment workable.
Recommended for you
Financial Services Council chief executive, Blake Briggs, is urging Minister for Financial Services, Stephen Jones, to take advantage of the QAR opportunity to reduce regulatory duplication and ensure advice is affordable.
Former chair of the House of Representatives’ Standing Economics Committee, Tim Wilson, is planning a return to politics after losing his seat in the 2022 federal election.
Morningstar is going to offer research ratings of funds in the $3.5 trillion superannuation sector for the first time in response to demand from financial advisers.
Treasurer Jim Chalmers has opened a consultation into the design of the annual superannuation performance test, canvassing views on a range of reform options.
