Professor Deborah Ralston

The pre-eminent retirement incomes research organisation, the CSIRO-Monash University Superannuation Cluster, has secured another significant private sector backer with the decision by ANZ Wealth to join its ranks.

ANZ Wealth will join five other organisations as the key supporters of the $9 million research project that brings together academics from four universities, Monash, Warwick, Griffith and Western Australia, as well as the CSIRO, to examine the challenges facing the Australia’s retirement system.

The other five organisations are BT, Cbus, Mercer, Vanguard and Challenger, which, together Treasury, the ATO, the ABS, ASFA, National Seniors and AIST, form the Cluster’s Steering Committee with eminent researcher, Professor Hazel Bateman from the University of NSW. The Australian Centre for Financial Studies (ACFS), which promotes thought leadership in the financial services sector, leads the project for Monash University.

Patrick Clarke, Head of Direct Super and Investments at ANZ Wealth, said it was a privilege to be involved with the CSIRO-Monash University Superannuation Cluster.

“Over the past 18 months the work done by CSIRO and Monash in examining the dynamics and inter-relationships between superannuation and the wider economy, as well as the transition and retirement phase of Australians over 60, has been first class.

“We believe it’s critical that this research continues so that both the public and private sectors can base their decision–making on hard data in the vital area of superannuation.”

Dr Sarah Dods, CSIRO’s Research Director, Digital Economy, Digital Productivity and Services Flagship, said it was a tribute to the research done by the Cluster that such a significant player in the wealth management sector had decided to come on-board.

“We believe the research we have been conducting in areas such as ways to improve the participation of older workers is critical if we are to get the superannuation policy settings right, and for an organisation of the reputation of ANZ Wealth to give its support further endorses the value of our work.”

ACFS Executive Director, Professor Deborah Ralston, said the sheer size of the superannuation pool, at $1.8 trillion, posed important policy issues that the Cluster had been addressing.

“In the past, much of the research focus has been on asset allocation and the accumulation phase. But much less focus has been given to the post retirement phase and Australians over 60; a better retirement system is broader than superannuation, including pensions and private savings.

“What is critically needed for better policy and product development in post-retirement is a research evidence base.

“Funding for better health and welfare, accommodation and transport, they all have a bearing on the quality of the life enjoyed by older Australians and are important issues that demand a policy response, so the fact ANZ Wealth is giving its support to the Cluster is testimony we have the right focus and are adding to the pool of knowledge around retirement incomes policy.”

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Christine Hornery

Some of the most disturbing statistics in the Association of Superannuation Funds of Australia (ASFA)’s March 2014 update on the level and distribution of retirement savings, according to financial planner Christine Hornery, director of FMS Group, are that more than a third of all women and around 60 per cent of those aged between 65 to 69 reported having no superannuation.

“What these statistics tell us is that one in three women in Australia does not have a single cent in super,” Ms Hornery said. “They have no money stashed away in superannuation for retirement whatsoever.”

Ms Hornery said women need to take extra care of their financial future – and not just because typically they are likely to live longer, live longer in retirement and earn less than men but because moving forward, fewer people are likely to be able to access the age pension entitlement.  “I believe there are women retiring today who are using Centrelink to subsidise their retirement and that just may not possible for as many people in the future,” she said.

Women need to understand that the preservation age (the age at which people can withdraw money from their superannuation funds), the retirement age and the ability to access retirement benefits is likely to lift so they need to act early if they want to have sufficient funds to do what they want to do in retirement.

“The other disturbing thing is that many women are not engaged when it comes to their superannuation and, I believe, are only becoming less engaged,” she said.

The Suncorp-ASFA 2012 Super Attitudes Survey (the Survey) revealed only 19 per cent of women say they are actively involved with their superannuation. “The main reason given by women for their lack of engagement was that they didn’t know how to get more involved,” Ms Hornery said.

Although the numbers are not broken down by gender, the Survey also said one in four Australians don’t know their current balance, one in 10 don’t know who their super provider is and one in four either don’t know what fund option they are in or that they could choose. “Finding answers to these four questions is a good place to begin for women who don’t know where to start,” Ms Hornery said.

Time spent on managing other day-to-day finances was also a common reason for people not to get involved with their super, according to the Survey, with 30 per cent of Australians citing this reason.

“What this tells us is that people think there are more pressing things in their current lifestyle so they aren’t thinking about the future,” Ms Hornery said. “My suggestion is to not just think about today – start thinking about what your future is going to look like. And then get financial advice. Talk to a professional and get some advice and strategy so that you can accumulate more funds towards retirement savings. A product alone is simply not going to give that to you.”

Ms Hornery was awarded the 2012 Association of Financial Advisers (AFA) Female Excellence in Advice Award.

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Speaking at the annual Association of Superannuation Funds of Australia (ASFA) Conference in Sydney, Hess said providing individuals with tangible income projections, and incorporating these into a series of tailored, proactive data driven communications had helped capture US pension plan members’ attention, encouraging them to take action to build their retirement savings.

The ‘data smarter’ communications are powered by advances in member data customisation capabilities and a deeper insight into the behavioural attributes of members.

“We’re starting to have a better idea of what works to reach and motivate people and advances in technology and data analytics is set to empower these programs to achieve real change in the retirement prospects for many Americans,” Hess said.

The message comes as Australian super funds continue to battle poor member perception. Recent Roy Morgan research* showed that only 42 percent of members in retail super funds were satisfied with the financial performance of their fund, compared to 49 percent for industry funds and 64 percent for self managed super funds.

Hess, who is in Australia to visit J.P. Morgan’s Investor Services group, which resides in the Corporate & Investment Bank, and share member engagement strategies with its local superannuation fund clients, noted, “Triggering member action on retirement savings adequacy and tailoring the message to different investor circumstances is a universal challenge for institutional investors world wide. Despite the different retirement systems, we see common challenges across US and Australian funds.”

Audience of One® approach
In the US, J.P. Morgan runs a member communication and education philosophy, Audience of One®, that is based on the firm’s experience that effective communication programs must speak to each participant as a unique individual. Audience of One® communications resonate with members by adhering to the following principles:

• Make it personal – marry data and message to offer a relevant, individual experience
• Make it simple – break messages down into manageable pieces
• Connect the money to the emotion – motivate participants to take responsibility
• Diagnose before you prescribe – understand an individual’s current situation
• Cultivate an ongoing relationship – pursue an ongoing dialogue with participants

US pension plan participants exposed to Audience of One® during the period 2005-2012 showed a 31 percent increase in their overall income replacement levels, with the number of participants on track to achieve at least 70 percent of their income in retirement increasing by 104 percent.

Hess said the rapid evolution of data customisation means super funds can now use individual member data to build tailored messages based specifically on each member’s fund profile – taking into account age, income and levels of engagement. These messages work to drive constructive member behavior and can be delivered through all touchpoints: Internet, call center, member statements, print media and face-to-face education meetings. He said simplicity was the key to effective communications.

“Every Audience of One communication comes down to one salient point, helping participants answer the question: “Am I on track to live comfortably through my retirement?” he said.

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