Funds need to switch assets, not strategy: AustralianSuper

Improving retirement incomes in the superannuation system should be about changing and improving the timing of switching asset allocations, not changing investment allocations, according to industry commentators.

Speaking on a panel at the launch of the Mercer global pension index, Australian Super chief executive Ian Silk said the timing of investment horizons for individuals should be a focus for the industry to improve retirement outcomes.

Silk criticised those advocating an increased use of fixed interest in super, saying that almost all of those supporting such a move would be commercially advantaged if that were to happen.

"That's not to say that the argument is necessarily in-and-of itself wrong, but it does cause you to put the lens closer to the argument and see if it stands up," he said. 

VIEW ALL

View all

Investment performance figures over the last decade showed that the mix of equities and conservative assets was working, and it was therefore difficult to suggest there should be a change to investment weighting that was dramatically different to the current situation, Silk said.

The individual member's perspective and their investment horizon was the critical determinant, not some macro view of what the system's assets are, he said.

This approach would lead to a product solution, Silk added.

Allen Consulting group director Vince Fitzgerald said that while equities outperformed, many people have shorter time horizons and need to have access to their super entitlement in cash to pay off debts.

Rather than massively changing their asset allocation, people should be educated to be in the right product for the part of their balance that they will need at a particular event.

Managing director of Franklin Templeton Investments Maria Wilton said members' investment timeframe was 50 to 60 years, and default portfolios should be built with that long timeframe in mind.