The trend for older workers to postpone their retirement for a few years or just to keep on working indefinitely without firm plans to retire at a particular age has no doubt created a new frontier for super funds.
Super funds that had once directed their line-up of investments and services at a largely younger workforce are having to revamp their thinking for a somewhat older membership – depending upon the makeup of a particular fund’s membership.
While some large funds clearly have an ageing membership others have a membership that is spread widely across the age spectrum.
The cover story in the September issue of Superfunds magazine – headed Future of the Workplace – provides a fascinating insight into what super funds should be considering in regard to their older members.
Superfunds is published by the Association of Superannuation Funds of Australia (ASFA).
Points put forward by specialists interviewed for the feature by veteran journalist Michael Laurence include the need for funds to check whether asset allocations for their default portfolios are appropriate for older members with increasing life-spans and often insufficient super savings.
Some of the other points discussed in the article are the need for funds, according to those quoted, to provide suitable education for members regarding their life/work mix and about easing their way into retirement – perhaps using a transition-to-retirement pension.
Dr David Knox, senior partner for retirement, risk and finance with the Mercer group, is quoted about the role super funds should have in the development of longevity investment products as their members age – leaving the workforce at older ages and living until greater ages.
And Richard Weatherhead, a director and head of insurance for Rice Warner Actuaries, speaks of the need for funds to ensure that their default insurance is suitable for older workers who are tending to take on debts later in their working lives.
The inadequacy of super savings of many older members – particularly considering they didn’t have the benefit of Superannuation Guarantee contributions for much of their working lives – is a reality that, of course, faces funds and their members.
And this is likely to be increasingly at the forefront of super fund thinking as more members decide to stay with the same fund in both the accumulation and retirement phases.
This is certainly a new frontier for super funds.
* Written by Robin Bowerman, Head of Retail at Vanguard Investments Australia.
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