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New research emphasises continuing exposure
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| Ian Silk
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New research released by Australia's largest superannuation fund, AustralianSuper, has confirmed previous findings that reducing investment risk exposure could be a mistake for Australians when they retire.
AustralianSuper chief executive Ian Silk said the research involved comparing the risks and benefits of the fund's current default investment option against several other options and default models such as aged-based and target date pensions.
"One of the key findings of the review was that it [could] be detrimental for members to reduce their investment risk once they retire," he said.
Silk said that as a result of the research, AustralianSuper had not only retained the balanced option as AustralianSuper's default investment option for accumulation members, it had introduced an age-based default for its pension product.
He said the concept of "retirement income" as distinct from "retirement balance" had been central to the fund's analysis.
Silk said given most members' long investment horizons, which increasingly continued beyond retirement, the review highlighted that it was important to invest with the objective of providing the highest possible retirement income for the longest possible period, rather than simply maximising the account balance at retirement.
AUTHOR
Mike Taylor
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