Retirement: a spotlight on default options

On 14 September, TAL was proud to sponsor ASFA’s inaugural Spotlight on Retirement conference in Melbourne. With an average of 200,000 Australians retiring each year, it’s great to see the industry coming together to discuss how we can help super fund members achieve better financial outcomes in retirement.  

The conference provided some great food for thought on how we can collectively navigate the requirements of the Retirement Income Covenant, while best meeting the needs of members.

The various sessions covered a range of key issues including:  

• the changing world of work and its impacts on retirement expectations for members
• regulator expectations of the industry to increase focus and activity in the retirement segment 
• how richer data and future use of artificial intelligence could pave the way for more personalised retirement outcomes  
• the role of super in supporting the aged care needs of members 
• challenges around delivering member education and advice at scale in an evolving advice landscape. 

Default options for retirement products

A current hot topic in the retirement income space is how trustees can determine the most appropriate way for their members to take up a retirement income product that’s right for them. At the conference, I had the pleasure of participating in a panel session on this subject, along with Ben Hillier, General Manager of Retirement Solutions at AMP, and Dr Geoff Warren, Research Director at the Conexus Institute.

Chaired by Nicole Oborne, Partner, Superannuation and Asset Management at PwC, the panel explored the various myths and benefits around trustee guidance – or default mechanisms – for members to enter a retirement income product.  Defaults have been part of our retirement system since the beginning and have evolved over time: from compulsory SG contributions and insurance defaults to stapling and life stage investing. 

What’s more, defaults aren’t just part of Australia’s retirement system. There are plenty of overseas examples such as the move to auto-escalation for 401k plans in the US that gradually increase employer contributions into plans, or the simple opt-in approach for lifetime pensions in the UK since the move away from compulsory annuitisation during the 2000s. 

This sets the scene for super funds to consider a range of default options as an entry point to retirement products. The key is for trustees to provide default settings that best improve member outcomes in retirement at a cohort level and adequately address the core principles outlined by the Retirement Income Covenant.

We look forward to continuing the conversation with our super fund partners as we work together to build retirement solutions that will help more Australians retire with confidence and dignity. 

TAL retirement income solutions 

As a partnerships and protection business that specialises in providing institutional solutions, TAL is uniquely placed to collaborate with funds to build next-generation retirement solutions. 

Our goal is to support super funds in meeting their obligations under the Retirement Income Covenant to ensure members maximise their expected retirement outcomes, manage expected risks and have flexible access to their funds.

To find out more about TAL retirement income solutions, download a copy of our Retirement Positioning Paper.