The most expensive mistake retirees can make

Analysis by SuperEd has found that single retirees are on average losing $37,000 in age pension entitlements due to delays in applying for the age pension while couples are typically losing close to $60,000. SuperEd’s review of data from its Retirement Essentials service indicates that Australians often apply for the age pension well after the time they become eligible, on average about 2.3 years after. There are several reasons for this including:

  • Some people are still working
  • Many - often incorrectly - assume they won’t be eligible so don’t bother 
  • Others don’t want to rely on the pension, perhaps for reasons of pride
  • Procrastination

We see procrastination as particularly concerning. Many people put the application aside as they don’t want to have to deal with Centrelink or perhaps because they don’t understand that every week they delay is costing them money.  For a single person eligible for a full age pension the loss per week is close to $500. To compensate for the loss of the age pension retirees will be forced to deplete other savings - including their superannuation - which will materially affect how comfortable their retirement will be. 

The age pension is a vital pillar of the retirement income system and 70% of retiring Australians will be eligible for a full or part pension. According to the Australian Bureau of Statistics the pension, or other Government allowance will be the main source of income for 57% of Australians over age 65. With so many Australians eligible for the age pension, the bulk of whom will have it as the main source of their income, super fund trustees should be doing everything they can to ensure members get access to the age pension as soon as they are eligible. 

Game plan

Is effective member engagement an art or a science?

AMY BRADDON from SUPERFUNDS magazine explores the power of connecting with members through experience, entertainment and gamification.

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The digital advice journey

As a fund you want to deliver a personalised advice journey. SuperEd can help you achieve this vision: an individual journey for each member. Watch our video to learn more.

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ASFA speech highlights new thinking on advice

Adapted from Jeremy Duffield’s speech at ASFA 2015

Apollo 11 astronaut Buzz Aldrin, speaking at ASFA 2015, talked about mankind’s push to get to Mars as our next great space challenge.  Buzz claimed “Our future is in space.”  Well, the super industry may have its feet more fixed on the ground, but we have great challenges and opportunities, too.  To paraphrase Buzz, I reckon: “Our future is in advice.”  

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Multi-channel advice is the way forward

Do your members have the tools and advice they need to make the right decisions to optimise their retirement income?

The Australian super system makes the individual responsible for their own retirement success. But the average person doesn’t know what are the right decisions or which actions they should take - they need financial  advice.

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Financial literacy is key

The mandatory nature of Australia’s super system means that most people are responsible for making important financial decisions about their retirement. But how well equipped is the average Australian to make decisions about super and retirement planning? Research into the financial literacy of Australians, suggests that most are not well equipped at all and that financial literacy is key to successful retirement planning.

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The trend to personalisation

When super was first introduced, there was little choice and less personalisation. Engagement with super was extremely low and only wealthy people had personalised financial strategies, prepared for them by their financial planner.

Fast forward about 25 years. Engagement has lifted (although there is still work to be done) and more people than ever are choosing their super fund. At the same time the benefits of personalisation are being recognised.

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Personalisation makes sense

Why? Everyone is different

Is there a typical member? Even if two people are in the same industry, with a similar income they won’t have the same investment goals. The personal financial situations will be different, so it makes sense to personalise their super investment.

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Think retirement income

To fulfil the promise of superannuation, super funds must now shift their focus from the accumulation of super to the decumulation phase.  To do this successfully, funds certainly need product, service and advice solutions, but they also need to shift the thinking of their members. We need to get people thinking in terms of retirement income.

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Pre-retirees remain wary

We recently held focus groups to talk planning and income in retirement. Across the board, people are sceptical - looking for answers and advice they can trust and wary of changing legislation and market downturns. 

Here we share the key themes which emerged – not surprisingly around adequacy and trust.

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Are your tools right?

Projection tools can really help to engage members and build an understanding of how their actions can impact their super savings. 

But are your tools giving members the right answers?

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Winners & losers

Deloitte report ‘Dynamics of the Australian superannuation system – The next 20 years: 2013-2033’ highlights that if you're 30 today (with 35 years of super to come) you won't enjoy a comfortable retirement unless you add an extra 5% each year.

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Time for funds to innovate

The Australian superannuation industry eagerly awaits details of the new Liberal government's direction on super policy. After a marathon effort by the previous Labor Government to rewrite the rules governing default super and an equally ambitious game-plan to transform compensation for financial advice, the default industry mood in recent years is one of exhausted resignation.

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