Vanguard Super launches lifecycle option with 36 cohorts

Vanguard Australia has gone live this morning with its much-anticipated lifecycle superannuation fund offering, Vanguard Super SaveSmart.

"We're the first super fund that's got an end-to-end license...in over six years. And the reason that nobody has done it is that it is a big body of work. It took us two and a half years to get there," Vanguard head of superannuation, Michael Lovett, told Industry Moves.

"We're really proud of what we've come up with. We are going to be continuing to build and evolve it in time."

The fund has launched with an accumulation product called Vanguard Super SaveSmart which includes a lifecycle default fund or MySuper option, along with a series of index-based diversified options and a number of single sector investment options.

The Vanguard Super Lifecycle options, which are also known as target date funds in the US as they target a particular date for retirement and adjust asset allocation accordingly, is launching with 36 cohorts. Once a member reaches 47 years old the lifecycle option will start to reduce the asset allocation to growth assets annually on a member's birthday for the next 36 years.

"We've actually got the ability also in the future to actually even tailor [the cohorts] more. We might add in other factors. At the moment, it's just based on age, but we could add in other factors like gender, or type of work, etc, etc. At the end of the day, we think it's a really exciting product, but it also has the potential to be even better in the future," Lovett said.

While the majority of the product has been developed in house and uses Vanguard's extensive global experience, locally Vanguard has signed up with new administrator GROW Inc which is enabling a lot of the tailoring.

"When we started this, we thought we had a one time advantage with no legacy to start with a blank sheet of paper and so we decided to go with a start up in GROW and we're really pleased with the capabilities that they've got for us today," Lovett said.

"It's giving us a lot of flexibility to do things not only today but also in the future."

"GROW is extremely excited to be partnering with Vanguard on the launch of Vanguard Super into the market. We believe the product will raise the bar even higher in superannuation and we are pleased to be supporting them with our DLTA administration platform," GROW head of strategy, Adam Gee, added.

Lovett said Vanguard planned to launch a pension product in early 2023.

"Also, when you think about retirement, it's not just about the product, it's about the experience. So, we're building calculators, we're thinking about the education we need to provide. So, it's not just the product it's the experience we want to provide as well."

Fees on the default option are 0.58 per cent and the funds are available direct to retail investors, with digital access for advisers via the Vanguard Adviser Portal to be added shortly.