Most superannuation fund product managers have low awareness of their fund’s Retirement Income Covenant (RIC) strategy or do not think their fund is ready for the 1 July legislation deadline, according to research.
This was despite most senior executives believing their fund had a well-articulated RIC strategy, according to CoreData research commissioned by Challenger, consisting of one-on-one interviews and quantitative surveys of 43 professionals working at 19 super funds.
Leaders were also divided on how to operationalise their strategy with half expecting to further develop their internal capability while two in five were seeking solutions from partners to help plug gaps in their knowledge base (such as institutional term annuities and the decumulation investment mandate).
However, it was longevity solutions for managing longevity risk that topped the list for super funds needing expert support. At 89%, demand was twice as high as any other gap in the solutions funds needed to support their RIC rollout. Two in three funds said they would outsource longevity risk to third parties while one in four funds did not know if they would do this.
CoreData Global chief executive, Andrew Inwood, welcomed super funds’ interest in expert support for managing longevity risk for their members.
“What’s unique about longevity risk is that it’s specific to retirees and needs a specific solution. Managing investment strategy is only part of the answer; it will not solve longevity risk.
“The internal capability a super fund needs to implement a longevity solution or mitigate longevity risk is considerable in terms of their operational capability and liability management.
“Partnering with an expert will enable a fund to bring a compliant, fit-for-purpose retirement income product to market quickly with fewer internal resources dedicated to longevity protection.”
Michael Lovett, who left the investment firm just three months after launching its Vanguard Super offering, has taken up a chief executive role at an Australian asset manager.
The Central Bank of Ireland has granted the approval of Equity Trustees’ exit from its Irish operations, with the transaction expected to be complete on 30 April.
Super returns continued to climb in March, raising hopes of delivering double-digit returns by June depending on the performance of this next quarter.
The dedicated super fund for emergency services and Victorian government employees is under fire for unpaid entitlements to transport employees, which could exceed $40 million.
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