NGS Super tees up retirement offering

NGS Super has launched a new investment solution for retirees, representing an important step in fulfilling its retirement income strategy objectives. 

According to the fund, its new Easy Default solution will offer people entering retirement the confidence of knowing they will have a regular income while their retirement savings continue to support the lifestyle they want.

“The debate [around retirement products] has heated up and leading a super fund, I understand some of those challenges, but it was really important for us to just get rid of the noise and think about what our members needed right now,” said Natalie Previtera, NGS chief executive.

“People want to make the most of what they have, so as a fund, it was important to demystify retirement.

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“It’s a challenging time for people, they’re heading into a period of life when a lot is changing and money is an important part of that. We’re in the business of providing retirement confidence [and] that’s the starting point we came up with.”

The fund’s Easy Default solution can be set up on the NGS Income Account or Transition to Retirement Account.

When chosen on the NGS Income Account, 12 per cent of the members’ funds will be invested in the cash and term deposits option and the remaining 88 per cent in the Retire Plus option. With this, members can receive fortnightly payments from their cash bucket while their growth bucket remains invested in assets designed to generate long-term returns.

NGS noted that prior to age 75, drawdowns in this option are higher than the legislated minimum amount at some 6 per cent of the member’s account balance. 

“When the money in the cash bucket runs low, it can be topped up from the growth bucket, and members will be reminded when it is time to start thinking about topping up,” it said.

Meanwhile, when Easy Default is used on the NGS Transition to retirement account, the total balance is invested in the NGS Diversified Option and regular fortnightly payments are drawn from there.

“We’re very lucky here at NGS because we’re not at the tiny end of town, but we’re not at the big end of town either, so we really understand who our members are and what they need. With that starting point, we wanted to build a product that’s simple enough for them to navigate themselves, perhaps with some simple advice and tools if they needed to go down that direction,” Previtera told Super Review.

“But if they didn’t – and a lot of people for whatever reason don’t want to pursue advice – [the product] could be structured in a way that allowed them to embark on that new stage of life and do that confidently, knowing they are going to have a regular income and their money isn’t suddenly moved to a defensive, kind of locked in position.”

Earlier this year, a joint report from APRA and ASIC found funds were falling short of meeting their legal obligations to help members plan their retirements through the Retirement Income Covenant (RIC) and lacked urgency in developing their capabilities to improve retirement outcomes for members.

NGS’ Easy Default came just weeks after the launch of TelstraSuper’s RetireAccess Lifetime Pension, which is understood to be the first profit-to-member guaranteed lifetime income stream since the commencement of the RIC.

Previtera agreed the RIC places an increased focus and expectation on super funds to support members in achieving a better retirement, including helping members live comfortably in retirement and manage risks like longevity, market volatility and inflation.

She added NGS’ Easy Default was tailored for its membership and was not necessarily competing with some of the products that big funds are providing in their retirement offerings. 

“We’re not trying to be revolutionary here, we’re really trying to design something with our membership in mind and that will appeal to other people who want that simplicity,” she said.

“The language matters around buckets, instructions, and the tax treatment of [these products] so we really wanted to make it as simple as we could. People can go, ‘I see it, I understand it’.”

Looking further down the line, she “absolutely” saw more product offerings for the $15 billion fund’s retiree members.

“We don’t want to overwhelm with too many different options. This is a simple product and I don’t mean simple to diminish it in any way, but I don’t think quality has to be complex,” she said.

“We will definitely be continuing with product development, but we wanted to start off with a really solid, engaging base and that product is going to be plenty for many of our members.”