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| Michael Rice |
Retaining members during their retirement is just as important for superannuation funds as member engagement, according to Rice Warner Actuaries managing director Michael Rice.
“The superannuation industry has for many years focused on ways to engage members in their super. It is now time to shift gears and construct better ways to also retain members as they retire,” Mr Rice said.
As a starting point, Rice Warner principal Bill Buttler said internal modelling had found that “formulating these strategies based on projected retirement balances is a useful starting point”.
Buttler said that three distinct member cohorts had emerged in the modelling: those with retirement balances under $250,000; those with balances between $250,000 and $500,000; and those with balances over $750,000.
People retiring with balances below $250,000 would qualify for the age pension since they would have few assets outside the home, Buttler said. They still need advice, but their path is less complicated and it should be appropriate for them to hold their nest egg in a liquid, secure option in an account-based pension, he said.
Members with balances between $250,000 and $500,000 would need to be cautious about longevity risk, so they would want most of their funds to grow for as long as possible, Buttler said.
Finally, those with balances in excess of $750,000 should be able to live off the earnings in their account, and they would need complex financial advice, Buttler said.
Rice said that by understanding their members’ specific needs through accurate analysis, super funds could “hold members loyal to their superannuation fund at the point of retirement”.
