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Pension should be included in super projections
Superannuation funds should include all member benefit projections, including age pension entitlements in annual member statements, according to an Institute of Actuaries of Australia survey.
The majority of respondents, who included super fund chief executives, senior management and actuaries, also agreed that providing projections would encourage members to increase their voluntary contributions by giving them a more accurate idea of how well off they would be in retirement.
Institute of Actuaries chief executive Melinda Howes said that results showed standardised assumptions, including both a lump sum and annual income estimate and age pension entitlements, would be among the best ways to produce meaningful projections.
While the vast majority of respondents agreed assumptions on how to calculate investment returns should be standardised across the industry, slightly more than half believed fees should be specific to the super fund, rather than a standardised fee assumption.
About 60 per cent of respondents agreed a projection should be provided to individual members based on the investment strategy that they have chosen, such as conservative, balanced or growth.
Projections should vary based on investment strategy and show a range of outcomes for different investment options or different contribution rates, the survey found, although some respondents said it would be better to keep projections as simple as possible.
“There is a need to balance the amount of information provided in a superannuation benefit projection with the goal of providing a useful tool for members,” Howes said.
“The form [projections] should take and how they are calculated is a matter for debate but the most important factor should be that it helps people save for retirement,” she said.
AUTHOR
Mike Taylor
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