Life-cycle funds boost retirement income: MercerBY MARK SMITH | TUESDAY, 4 DEC 2012 10:50AMAdding a whole of life age-based investment default option to superannuation funds would reduce investment risk and help restore confidence in the Australian super system, according to Mercer's David Anderson. |
Editor's Choice
IFM Investors appoints global product strategy head
IFM Investors has strengthened its global leadership team with a senior appointment of a former WTW consultant.
Macquarie AM launches venture growth fund
The new fund will provide eligible investors access to late-stage growth companies around the world based on a two-decade track record with more than 350 investments.
Consistent climate disclosures matter: ASFA, ACSI
The Association of Superannuation Funds Australia (ASFA) and the Australian Council of Superannuation Investors (ACSI have joined four other peak investment bodies to push for continued transparent and comparable climate disclosure.
Ironbark expands advice footprint with acquisition
Ironbark Financial Group has acquired a Victoria-based multi-disciplinary firm that specialises in assisting small to medium sized businesses, integrating the practice into its Ironbark Advice brand.
Further Reading
Products
Expert Feed
When geopolitics becomes a portfolio risk
Geopolitics is back - again - and Australian investors can no longer treat it as distant background noise.
Does association membership still matter?
With all the changes the advice sector has experienced in recent years, such as regulatory reform and increased education and professional standards ...
Digital assets and where they stand in 2026
So far in 2026 digital assets have captured the headlines largely for the wrong reasons, but that doesn't tell the full story.
Rethinking default design in a changing market environment
The evolution underway in the US DC system highlights the value of periodically reassessing default design assumptions.
Featured Profile
Jacqueline Fernley
CHIEF EXECUTIVE OFFICER
ARC POINT OCIO PTY LTD
ARC POINT OCIO PTY LTD
Jacqueline Fernley is a self-confessed nerd, a market animal and as of this year, her own boss. Riddhima Talwani writes.
The Financial Standard podcast Tune in each week as we discuss the latest developments in Australia's wealth management industry. |  |
Age based Lifecycle funds major drawback is they simply reduce risk at the expense of return using one factor - Age. Two members of the same age often have vastly different risk profiles/retirement prospects. For trustees looking at long-term strategy for their Funds this leads to lower FUM and growth rates over time compared to peers. What's need is a more 'efficient' model.
Fortunately the MySuper Lifecycle legislation allows for the use of more factors than age - one of these may well be projected retirement lifestyle/balance. Using multiple factors enables two 25 year olds, one expected to retire on a million and the other on the pension to be automatically invested in different asset allocations. Using this approach higher retirement balances for members and hence higher FUM for trustees on average can be achieved compared to the Default Option, while aligning member's asset allocation with their age and retirement prospects.
David Anderson is correct that the theory is straightforward and that the product must be mass tailored to each fund and its members. However implementation is not complex - it just requires trustees to use the information already held by in their own member databases. Trustee Tailored Super (www.trusteetailored.com) is an automated patented method for achieving this improved risk/return outcome - not a Default Option not an Age Base Lifecycle Option but a new more efficient approach.