The new board directors, Professor Alec Cameron, Professor Hazel Bateman and Rebecca McGrath, bring with them a wealth of experience across several industries including academia, finance and research.

Professor Alec Cameron brings over 22 years of leadership experience to the UniSuper Board. He is currently ViceChancellor and President of RMIT University and has held previous senior leadership roles at universities in Australia and the United Kingdom. Alec is a Rhodes Scholar and holds a PhD in Robotics from Oxford University.

Professor Hazel Bateman, a Professor in the School of Risk & Actuarial Studies at UNSW Sydney, has significant expertise in superannuation, pensions, behavioural retirement and lifecycle finance. Throughout her acclaimed career, Professor Bateman has consulted to leading global financial institutions including the World Bank and the OCED bodies in China and South Korea. She also held the role of Chief Investigator and Deputy Director of the ARC Centre of Excellence in Population Ageing Research (CEPAR).

Rebecca McGrath has enjoyed an extensive international career in the energy and resource sectors, including 24 years as an executive with BP in Australia, the United Kingdom and Europe. She has also served on the board of numerous public companies including CSR Ltd, Goodman Group and Incitec Pivot Ltd, and was Chairman of Oz Minerals Ltd.

The new board directors bring with them a unique skill set, which includes extensive experience in strategic leadership and corporate governance.

“We are thrilled to welcome such accomplished leaders to our Board,” said UniSuper Board Chair, Gregory Mark Armour.

“Their diverse backgrounds and experiences across a range of industries, will help us continue to shape UniSuper as a high performing fund which delivers for its members. Their extensive leadership experience will be crucial in guiding strategic initiatives across the fund.”

The new appointments follow the departures of Professor Lelia Green, Professor Peter Dawkins and Nicolette Rubinsztein, who all reached their term limits after nine years of exemplary service.

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Nicolette Rubinsztein

Nicolette Rubinsztein, Independent Non-Executive Director of Zurich, has been appointed as a Member of the Order of Australia (AM) in the King’s Birthday 2024 Honours List for her significant service to business, particularly the finance and commerce sectors. 

Justin Delaney, Chief Executive Officer, Zurich Australia & New Zealand said: “On behalf of Zurich, I would like to warmly congratulate Nicolette Rubinsztein on her appointment as a Member of the Order of Australia (AM) in the King’s Birthday 2024 Honours List.”

“Since her appointment to the Board of Zurich Australia & New Zealand in 2019, Nicolette has brought a breadth of experience from across the wealth sector and, importantly, a keen focus on delivering sustainable customer value and solutions,” Mr Delaney said. 

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Nicolette Rubinsztein

The Australian Actuaries Climate Index shows winter 2019 was among the driest on record, with six out of the seven states and territories experiencing below average rainfall relative to the reference period of 1981-2010.

Parts of Western Australia, South Australia and New South Wales experienced the driest or second driest season since the beginning of the reference period, reflecting the ongoing drought. Only parts of southern Victoria recorded rainfall that was close to, or above, the average during the reference period.

Although the latest index value is lower than the previous season, the individual component parts showed a continuation of the extreme weather conditions seen since the start of 2019. As well as lower rainfall across most of the country, extreme temperatures were experienced for every region except parts of north Queensland.

“Recent events, including the devastating bushfires in multiple states, underscore how important it is to get an objective view on climate patterns,” said Actuaries Institute President Nicolette Rubinsztein. “The Australian Actuaries Climate Index clearly shows extreme weather is happening more often,” she said.

The latest AACI showed large swathes of the country experienced unusually dry conditions, with WA, SA and NSW facing record levels of dryness, said actuary Rade Musulin, who collates the Index. This can be seen in the Southern and South Western Flatlands (West) in WA, and Rangelands South clusters, that spread from NSW across SA to WA, which had the driest and second driest seasons since 1981, respectively (Figure 2). These dry conditions reflect the extreme drought that parts of Australia has experienced since 2017.

Although some areas of North Queensland experienced extreme temperatures that were close to or below average, every other region in Australia was above average. Winter 2019 was the seventh consecutive winter to show extreme high temperatures that exceeded those of the reference period. Figure 3 shows the proportion of the last 20 seasons (5 years) that have been above average.

Most of the country has experienced above average extreme high temperatures for much of that time. Some parts of NSW have not experienced a single season below the reference period average in the past four years.

Projections from the Bureau of Meteorology (BoM) and Commonwealth Scientific and Industrial Research Organisation (CSIRO) indicate that this is likely to continue.

The temperature results are consistent with global experience as measured by the US National Oceanic and Atmospheric Administration (NOAA), which reported that the June-August period was the second warmest in the last 140 years globally and the third warmest in the southern hemisphere.

Australian weather during the period was influenced by a combination of a neutral El Niño Southern Oscillation (ENSO) and historically strong positive Indian Ocean Dipole (IOD).

According to the BoM, a positive IOD results in below average rainfall and warmer days for much of central and southern Australia during winter-spring. Positive IOD events are often associated with a more severe fire season for southeast Australia.

“Actuaries are deeply involved in a wide range of work underway to better understand the risks of climate change and explore ways the risks may be managed,” said Actuaries Institute Chief Executive Elayne Grace. “Actuaries have examined, for example, the potentially significant effects there could be on people’s health, retirement incomes and access to affordable general insurance,” she said.

The Actuaries Institute recently made a submission to the ACCC on its Northern Australia Insurance Inquiry – Second Update Report, which said in part: “Climate change is likely to trigger further changes in risk understanding, which may mean the market disruption issue will be with us for some time. Long-term consideration of climate change is essential. In particular, the implications of climate change need to be considered in building code, land use and infrastructure investment decisions.”

The index, which measures extreme weather conditions and sea levels across Australia, and how these vary over time, was launched in November 2018 and is updated quarterly. The Index shows changes in the frequency, or rate of occurrence, of extreme high and low temperatures, heavy precipitation, dry days, strong winds and changes in sea levels.

It is collated at the end of each season following the release of data from the BoM. The data is collected nationally and grouped into 12 climatically consistent regions. Each season is compared to the same season in previous years and against a reference period of 1981-2010.

Note: References to temperatures, dryness etc are based on the data underlying the AACI, which tracks changes in the frequency of extreme high and low temperatures, heavy precipitation, dry days, strong wind and changes in sea level, mainly concentrating on the 99th percentile of observations.

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Jim Hennington

Crucial tables used in software to estimate retirees’ longevity and calculate how best to ensure their savings last, need a critical update, the Actuaries Institute said.

The tables have a material impact on the way retirement income strategies and products are evaluated, and currently underestimate longevity.

“To have more than a coin-toss chance that a person’s retirement planning horizon is sufficient, you need to look at the timeframe that gives 80% or more certainty of being sufficient,” the Institute says in a research note to financial planners.

It goes on to say that while there is uncertainty around how long any one person will live, there are significant factors to take into account that result in big variations for groups.

For instance, a couple of average health, aged 65 (male) and 62 (female), need a plan that lasts until he is 100 in order that they can be 80% sure their financial plan meets their potential lifespan. “That is 16 years longer than if the adviser used the simple look-up table for a 65-year-old male.”

Actuaries Institute President Nicolette Rubinsztein said the government has made a strategic commitment to improve retirement income products, hoping to boost incomes for older Australians. But it is clear the tools financial planners use may not reflect best practice when it comes to Australia’s increasing life expectancy, she said.

“Life expectancy calculations are often required in the superannuation and financial planning industries,” Ms Rubinsztein said. “They have a material impact on the way retirement income strategies and products are evaluated.”

Over the last 50 years, Australians have seen a rapid and consistent increase in lifespans. In 1970, the average age of death for women in retirement was just over 80. In 2010 this had increased to age 87, which is what today’s basic lookup tables are using. But financial planners need to also consider how much this will increase between now and the time someone retiring today reaches their 80s or 90s.

“A healthy, well-educated female entering retirement today, who had an affluent career and enjoys a good quality of housing, is just as likely to live beyond age 100 as she is to die before age 80,” the Institute says.

If an adviser group has 1,000 healthy, educated, professional 65-year old couples as clients, it could expect more than half of these households to still have one spouse alive at age 95.

The basic lookup tables used in legislative instruments and financial planning tools used by advisers don’t allow for this critical planning issue. Clients need significantly different advice and strategic investments than if their life expectancy was assumed to be age 84 or 87.

Factors that affect longevity include improvements in medical research, living standards, nutrition and lifestyle, education, occupation, genetics and wealth.

Jim Hennington, the author of the research note, is from the Actuaries Institute Retirement Incomes Working Group.

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Nicolette Rubinsztein

A group of Australian actuaries have devised a simple ‘rule of thumb’ to help retirees work out how much money they should draw out of their savings in retirement.

The five actuaries ran a range of complicated equations and dynamic programming calculations to help single retirees who have reached Age Pension eligibility age, and who are receiving a part or full Age Pension but who choose not to seek financial advice at retirement.

Actuaries Institute President Nicolette Rubinsztein said many people can have a better retirement if they have higher confidence that they are able to draw down a little bit more of their savings than the minimum required by the government. “Many retirees draw a bare minimum from their account-based pensions, or their savings, after they stop work,” she said. “They can’t afford to pay for professional advice from a planner, and they live frugal lives because they fear outliving their savings. But the ‘rule of thumb’ is simple and accurate and takes into consideration a retiree’s asset base and age.”

Actuaries Institute Chief Executive, Elayne Grace, said: “Excellent techniques for computing optimal spending for individuals are available but these are complex. It has not been possible to find drawdown rules that are simple and optimal for everyone,” she said. “But the Working Group has developed a guide that could help Australians have a better retirement. All the rules respond to Age Pension testing parameters, which makes this work very important for a large number of Australians.”

Having done detailed calculations, the team of actuaries produced simplified guidance for pensioners who want an easy-to-follow rule. For many combinations of age and asset level, the simplified rules produce suggested rates of drawdown that are reasonably close to the optimal rate derived from the very detailed calculations.

The simplest ‘rule of thumb’ guide is that a single retiree should:

• draw down a baseline rate, as a percentage, that is the first digit of their age
• add 2% if their account balance is between $250,000 and $500,000
• the above is subject to meeting the statutory minimum drawdown rule.

For example, here’s what a single retiree, who retires with a superannuation balance of $350,000, could drawdown. The rule of thumb suggests that a retiree aged 60 to 69, would draw down 8% of their savings: 6% representing their decennial age, plus an extra 2%.

“The federal Government has encouraged the industry to develop better products to help ensure retirees don’t outlive their spending. But that’s still a way off. In the meantime, we’ve taken a complicated set of equations and scenarios, and worked out what is a simple guideline that works,” said John De Ravin, one of the actuaries who devised the simple ‘rule of thumb’.

Mr De Ravin said even if post-retirement products are developed, the current expectation is that typically, only 25% of someone’s balance would be invested in an annuity. “If that is the case, then 75% of a typical retirement product will still require a decision by the retiree as to how much of their account-based pension component to draw down,” he said.

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Nicolette Rubinsztein

The Actuaries Institute Australia is delighted to confirm Reinsurance Group of America, Incorporated (RGA) as the first Platinum Sponsor of the International Congress of Actuaries being held in Sydney, Australia from 3 – 7 April 2022.

RGA, one of the largest global life and health reinsurance companies, has been a longstanding supporter of the International Congress of Actuaries (ICA), having previously sponsored the last three events, held in Berlin (2018), Washington DC (2014) and Cape Town (2010).

Mark Stewart, CEO of RGA Australia said “RGA is proud to support the actuarial profession, in Australia, the Asian region and globally, at its premier four-yearly event, ICA2022. The contributions of the actuarial profession to financial services, insurance, pensions and risk management, are crucial to the long-term success of these businesses and the important roles that they play in society.”

Andrew Boal, Chair of the ICA2022 Organising Committee, has welcomed RGA as a major sponsor, saying “we are very pleased that RGA has led the way supporting this global event to be held in Sydney in 2022, and very much appreciate the active support of an important global reinsurer for this major event of the global actuarial profession.”

ICA2022 is a truly global event for actuaries and industry leaders. Nicolette Rubinsztein, current President the Actuaries Institute of Australia said “the Institute is very pleased to host ICA2022 in conjunction with the International Actuarial Association.

There are many forces at work shaping our future, both globally and in Asia. As actuaries we should learn from each other to better develop our understanding of these forces so we can better manage the risks and opportunities they may present.

I am sure the quality of thinking, the people, debate and conversation will be exceptional, and the Actuaries Institute Australia is very much looking forward to working with RGA to build a great Congress.”

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Tim Andrews

The Actuaries Institute has named Tim Andrews 2019 Actuary of the Year.

Mr Andrews is a Director and Chair of Finity Consulting, where he leads the Natural Peril Pricing and Climate Risk practice. Together with the Actuaries Institute, Mr Andrews developed and launched the first Australian Actuaries Climate Index, which measures the occurrence of extremes in weather, a key pointer to the risks of climate change.

“During Tim’s career, of three decades to date, he has done significant work to increase awareness of natural disasters in the insurance and financial services sectors and the need to mitigate risk associated with climate change,” said Actuaries Institute President Nicolette Rubinsztein.

“He has used his training as an actuary to develop models of the key sources of climate risk, including flood, bushfire, storm and cyclone, collaborating with meteorological experts, hydrologists and geoscientists,” she said. “His contribution, and his role as a mentor to young actuaries, has been outstanding.”

The Australian Actuaries Climate Index provides the first objective measure of the frequency of extremes in weather and demonstrates the integral role actuaries play helping businesses understand and respond to external forces.

Mr Andrews pointed to his work on the Climate Index as among his proudest achievements but said there remains much more to be done.

“I hope that we can go one step further and analyse the link between weather extremes and the risks faced by the community,” he said. “This would enable the development of indices measuring, for example, the extra bushfire risk on hot, dry and windy days or the extra risks to health during heatwaves.”

Mr Andrews said the extremes of weather provided challenges for insurers, but actuaries were well placed to contribute to the available climate change knowledge base by engaging with scientists and building models to quantify the potential financial risks.

One of the biggest issues would be how best to address the issue of affordability for homeowners in lower socio-economic groups, in areas subject to high natural hazards.

“We know we need to spend more on mitigation to reduce the risk,” he said. “Nonetheless there are ongoing questions about whether there is a role for well-designed risk pools that can subsidise premiums for high risk groups, but which still provide the right incentives for the mitigation to occur.”

Ms Rubinsztein said that the Actuary of the Year is a prestigious award presented to a member of the Actuaries Institute, recognising actuaries who have made a notable contribution to the profession.

“It not only recognises the achievements of individuals, it also raises awareness of actuarial capabilities, encourages the profession to continuously make positive contributions, and also enhances the profession’s profile,” she said.

Mr Andrews has led the Actuaries Institute’s Climate Change Working Group, served as convenor of the General Insurance Practice Committee, Natural Disasters Working Group, Flood Working Group and Chief Examiner for General Insurance.

He leaves Finity at the end of 2019 ahead of a move to India, where he will work for an international insurer. He will be based in Bangalore and will be part of the insurer’s global climate team while mentoring and supporting the company’s emerging actuaries.

“India is a future powerhouse of actuarial expertise and I am looking forward to working in a dynamic country and having the opportunity to contribute to the management of the climate risks faced by a global insurer,” Mr Andrews said.

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Nicolette Rubinsztein

Within the lifetime of Australia’s millennials, the occurrence of heatwaves will triple and they will be longer leading to increased deaths among the nation’s elderly, an Actuaries Institute Dialogue paper on the widespread impacts of climate change has found.

The paper states that heatwaves, which have killed more Australians than any other natural hazard, will at least triple by 2060-2080. More frequent, longer and hotter days will drive a significant increase in mortality, with Australia’s ageing population amplifying the number of people who will die as a result of climate change.

*The Dialogue paper, The Impact of Climate Change on Mortality and Retirement Incomes in Australia, has been written by Ramona Meyricke and Rafal Chomik. Dr Meyricke is a Senior Actuary and Associate Investigator, and Mr Chomik is a Senior Fellow, at the Centre for Excellence in Population Ageing Research at the University of NSW.

“Understanding the potentially significant implications of climate change is crucial to Australians’ wellbeing,” said Actuaries Institute President Nicolette Rubinsztein. “Many Australians understand the physical risks posed by climate change but few appreciate the impacts it could have on their mortality risks and their retirement savings.”

The Dialogue examines how climate change will affect Australians in broad ways including the impact on economic growth, health and mortality, government spending and investment returns. It says there are consequences for individuals and businesses including health, general and life insurers, pension providers, investors, and emergency services and governments. The Dialogue represents the views of the authors and builds on significant work done by the Actuaries Institute on climate change and its impacts, including the launch of the Australian Actuaries Climate Index.

It states that climate change and ageing populations are key global megatrends of the 21st century, interacting to create “a perfect storm”.

“Without proper risk management, these megatrends have the potential to overwhelm individuals, private companies and government balance sheets over the course of this century,” the authors state.

“In terms of public policy, the wide-ranging consequences of climate change on mortality, public health and the economy mean that system-wide policy responses are necessary to mitigate the risks posed.”

Heatwaves have killed more Australians than bushfires, cyclones, earthquakes, floods and severe storms combined and are the main threat to Australians’ mortality from climate change. The heatwave in Victoria in 2009 is estimated to have caused 374 more deaths than otherwise would have been expected. Mortality arising from future heatwaves could increase by 12% among over 65s by 2060-2080 in some regions.

The forecast is even more significant given predictions about Australia’s ageing population. Australian Bureau of Statistics figures project that by 2050 the population of over 65s and over 85s will nearly double and triple respectively.

“Population ageing will amplify the burden of heat related mortality and health risks in a warming climate; an interaction that policymakers and insurers have not yet fully taken into account,” the report states.

The potential impact of climate change on people’s lives could also extend to lower superannuation contributions and investment returns. Increased periods of under- or unemployment, driven by economies around the world transitioning to net zero emissions and/or a higher frequency of natural disasters, could lead to lower superannuation contributions. In addition, climate change has negative long-term return implications for investors who are not diversified at a total portfolio level to climate change, which could lead to lower superannuation balances. Illustrative scenario modelling suggests that an individual earning around $75,000 pa could retire with 11% to 18% less, or a superannuation balance of $40,000 to $70,000 less, because of lower contributions and/or lower investment returns.

The impact would be greater for those who experience both reduced contributions and investment returns. The predictions have major implications for individuals, superannuation funds and pension providers, including the federal Government. Two material cost drivers for life insurance and pensions (annuities) are mortality and investment returns,” the paper states. “Climate change is expected to impact on both.”

There may be a greater reliance on the Age Pension if climate change seriously diminishes superannuation balances, and a higher cost of provisioning for future Age Pension liabilities if investment returns are lower.

The present value of extra Age Pension expenditure on the median earner, if investment returns were 1% pa lower over that person’s life, is estimated to be around $30,000, the paper states. Failure to address climate change has been identified “as one of the largest socio-economic risks to modern society”. “There is mounting pressure on all financial institutions from investors and regulators to improve transparency and the disclosure of climate-related risk,” it says.

Key points:

• Heatwaves, which have killed more Australians than any other natural disaster, are expected to become more frequent and last longer.
• Deaths from heatwaves could rise by 12% among over 65-year-olds by 2060-2080 in some regions.
• Climate change may have negative long-term return implications for investors.
• For individuals, it may mean lower super balances; illustrative modelling suggests reductions of 11-18% for the median earner.

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Parts of central NSW experiencing ongoing drought conditions.

The Australian Actuaries Climate Index shows Summer of 2018-19 was a season of record extremes; the number of hot days reached record levels, there were all time high levels of extreme rainfall in tropical regions and parts of central NSW were caught in ongoing drought.

The index was released yesterday, and is the second quarterly update of extreme weather conditions and sea levels across Australia, and how these vary over time.

“The Australian Actuaries Climate Index is a great example of how actuaries can analyse data to ensure important and complex public policy issues are worked through objectively,” said Actuaries Institute President Nicolette Rubinsztein.

The index level for the summer corresponds to a 200% increase in the frequency of extreme high temperatures relative to the reference period (1980-2010). (See figure 1).

“The most recent Summer has been the hottest on record, both in terms of average temperatures as reported by the Bureau of Meteorology and in terms of the frequency of extreme temperatures as measured by the Australian Actuaries Climate Index,” said actuary Tim Andrews, who led the development of the index.

“The Bureau of Meteorology predicted this summer’s hot weather and reported it would be driven by a combination of the long-term increasing trend in global air and ocean temperatures, and the El Niño weather conditions,” he said.

The index also shows clear evidence of the sustained rainfall that caused flooding in North Queensland, and continuing drought experienced in central NSW (see figure 2).

Estimates consider the Queensland floods to be much rarer than a 1-in-100 year event. In Townsville 1260 mm of rainfall was recorded, smashing previous records, as a slow-moving low pressure system dumped rain for an extended period in late January and early February.

“The attribution of individual events to climate change is challenging to assess due to high levels of natural variability, but the Townsville event is consistent with expectations for rainfall intensity to increase,” Mr Andrews said.

He added that despite heavy rainfall in Australia’s north, there were significant parts of NSW and Southern Queensland experiencing extremely dry conditions during the Summer months.

The Index shows changes in the frequency (rate of occurrence) of extreme high and low temperatures, heavy precipitation, dry days, strong winds and changes in sea levels. These components have a strong correlation to risk, an area of expertise for actuaries.

The Index is collated at the end of each season following the release of data by the Bureau of Meteorology. The data is collected nationally and grouped into 12 climatologically consistent regions. Each season is compared to the same season in previous years, back to 1980, which shows how the extremes are trending over the long term. Extremes present the greatest risk to people, communities, the environment and economy.

Actuaries Institute chief executive Elayne Grace said: “This index highlights the importance for companies of managing climate risk. Australia’s regulators are already calling for greater risk disclosure from businesses and this index can be one step along that road.”

Ms Grace said over time, the Index will help business better assess how weather extremes translate into financial risk.

The Australian index was built following the establishment of a similar tool for Canada and the United States, supported by a number of actuarial groups including the American Academy of Actuaries and the Society of Actuaries.

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Class Chairman Matthew Quinn said the Board was delighted to appoint a director with such a strong background in superannuation and wealth management. “Nicolette has impressive industry experience and will add a valuable strategic perspective and depth to the Board,” Mr Quinn said.Ms Rubinsztein is a non-executive director of UniSuper, OnePath Insurance, SuperEd and the Actuaries Ms Rubinsztein is a non-executive director of UniSuper, OnePath Insurance, SuperEd and the Actuaries
Institute.

In her executive career she held senior roles at CBA/Colonial First State, BT Funds Management and Towers Perrin.Ms Rubinsztein was also a director of the Association of Superannuation Funds of Australia (ASFA) for eight

Ms Rubinsztein was also a director of the Association of Superannuation Funds of Australia (ASFA) for eight years and chair of its Super System Design Council. A qualified actuary, she holds an executive MBA from the Australian Graduate School of Management and is a graduate of the Australian Institute of Company Directors.

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