The ‘lifestyle risk' and the possible inability for the fund members to maintain a similar lifestyle throughout retirement has become the one of the most significant concerns and a new ‘longevity risk', according to Milliman's study.
The 'lifestyle risk' and the possible inability for the fund members to maintain a similar lifestyle throughout retirement has become the one of the most significant concerns and a new 'longevity risk', according to Milliman's study.
As the new legislative objective suggested that super was not the sole key to retirement, but just one of main pillars along with the Age Pension and private savings, it meant that longevity risk was no longer the most significant issue for superannuation funds.
According to Milliman's principal and senior consultant, Wade Matterson, the Age Pension would help underpin the retirees lifestyle until they die and increasing their super would have little impact on the retirement.
However, it would be those fund members with considerably higher balances and annual incomes with would typically peak in later years that would be facing a 'bigger dilemma'.
He said that funds needed to conduct analysis, which would include the impact of the Age Pension, and use their analytics and datasets to find out the actual objectives of their members.
"This information should ultimately flow into advice, education and product design, bolstering engagement, and retention along the way," Matterson said.
"This is the only path for funds that want to maximise the chances that members will achieve their personal retirement goals - and that is a more than worthy objective of super.
According to the study, the Age Pension's impact on retirement was often neglected and it reminded that the government had defined its primary objective for super as 'to provide income in retirement to substitute or supplement the Age Pension."