Super fund focus to shift to retirement products

The next one to two years should see an increase in the quantity, quality and variation of retirement income products on offer from superannuation funds, according to Optimum Pensions general manager, Peter Rowe.

"I think they're going to do it over the next one to two years [they're going] to start really looking at products seriously," he said.

"A few of the biggest funds have started looking and been doing a fair bit of work, but a lot of the other ones, they get bogged down with mergers and potential mergers. And they've got new reporting requirements from APRA."

There have been plenty of distractions for superannuation funds of all sizes, but the introduction of the Retirement Income Covenant, which requires funds to formulate and make public a retirement income strategy for members on 1 July 2022, has prompted a much-needed focus on retirement income.

Rowe is a three-decade veteran of the superannuation industry, and was previously chief operating officer at Vision Super, but his focus at Optimum Pensions for the last five years has been retirement and pensions.

The Optimum Pensions Real Lifetime Pension (RLP) is a lifetime income stream that Optimum Pensions developed to address longevity risk and is designed to be offered alongside the more traditional Account Based Pension. The product is investment-linked, and members are able to select from a range of investment options. The longevity risk is re-insured with Hannover RE, enabling the Real Lifetime Pension to be paid for life.

It is currently offered by Generation Life as LifeIncome but is also available for super funds to offer their members and Rowe says they have been having many retirement-product focussed discussions with funds.

Some of the bigger superannuation funds have the resources and knowledge to develop products themselves but for other funds it can be a very expensive exercise and they will require the assistance of a third party like Optimum Pensions.

Rowe also observes that many funds have created the new position of head of retirement income products.

"We've been talking to a different group of people too, over time, as funds are starting to put people in place who are specializing in retirement," he says.

For the past thirty years, the industry's focus has mostly been on accumulation, but the time has now come to consider what actually happens in retirement.

"When you look at the history of superannuation, you know, most people until the SG came in didn't have super and when it came in, it was 3 per cent. So, retirement was so far away in terms of a meaningful amount of money to make your retirement work. But 30 years later, it's time to do something," Rowe says.