Research house Milliman has added its voice to calls for a move away the Association of Superannuation Funds of Australia (ASFA) comfortable retirement standard to a more personalised member approach.
At the same time as universities-based industry fund, UniSuper has advocated a move away from fixed dollar targets, Milliman has drawn attention to a white paper authored by Jeff Gebler and Wade Matterson which claims a one-size-fits-all approach is inappropriate.
The white paper suggests that while the ASFA Retirement Standard represented an important step forward when it was launched in 2004, expectations had risen since then along with a dramatic increase in superannuation assets.
It said the personalised nature of each superannuation member’s retirement journey meant a one-size-fits-all approach simply could not deliver the necessary information, products, and risk management strategies required to achieve everyone’s desired outcomes.
“Or, as the Productivity Commission’s recent report into the industry’s competitiveness and efficiency put it, indicators which focus on the ‘median’ or the ‘average’ user will not necessarily reflect what is optimal for all or even most members,” it said. “Funds need to take a more nuanced approach or a lack of member engagement will be the end result.”
The white paper said that the inherent differences between funds required different strategies to support a comfortable retirement, which should be defined by members rather than be dictated to them.
“The only way to deliver products and services which will deliver better retirement outcomes is to learn more about members,” it said.
“Too many funds assume super is the central hub of retirement–as expressed through the ASFA retirement standard – when they have little or no information about members’ wealth outside of super or their personal expectations,” the whitepaper said. “Too many members who can’t meet this standard then receive a devastating message: they’ve paid for a product for decades over a working lifetime only to be told they haven’t earned a comfortable retirement (as defined by the fund rather than the member).”