TelstraSuper extends members’ time exposure to growth assets

TelstraSuper has announced changes to its MySuper life cycle arrangement from October, extending the length of time members are invested in growth assets as they work and live longer.

Now members gain five more years, with their exposure to growth assets reduced at age 50 rather than 45 and then further reduced at age 70 rather than 65. 

This could add extra money to the retirement balance of an average TelstraSuper member over their working life by the time they reach age 70, the $24 billion fund said. 

“Working patterns are not as binary as they used to be. People are not only living longer, but they are also staying in paid work longer or working more flexibly,” said Graeme Miller, chief investment officer.

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Miller stated the fund had carefully considered the appropriate risk and return levels for the different age groups. Typically, life cycle products gradually reduce members’ exposure to growth assets as they get older.

“Younger members who are decades away from retirement have time on their side to ride out periods of market volatility that can come from a higher exposure to growth assets. Importantly, our Growth option is invested across a range of diversified assets, which makes investing super in this option less risky than investing in a single asset class, such as shares,” Miller said.

Equally, older members could also benefit from another five years of moderate exposure to growth assets, he said. 

Members between 45 and 65 are currently invested in the fund’s MySuper Balanced option and older default members are invested in a Conservative option that has exposure to defensive assets, such as cash and bonds.

“The average 65-year-old today could live for another two or three decades in retirement so a higher exposure to growth is going to help their super last the distance. Importantly, the Moderate option still has an appropriate focus on dampening volatility and preserving capital,” Miller stated.

Earlier this week, Challenger announced it would launch a retirement partnership with TelstraSuper in the first half of 2024. 

The partnership will provide TelstraSuper with a lifetime income stream for its members through lifetime annuities that provide longevity and inflation protection.

Advisers will help retiring members move into a retirement income solution that will include a Challenger lifetime annuity. This will be an account-based pension making up 75 per cent and a group annuity making 25 per cent.