UniSuper is advocating for the redefinition of 'comfortable retirement' saying that the current one-size-fits-all approach is not the most effective way to achieve optimal retirement outcomes.
The industry fund, while remaining supportive of the plan to enshrine the objective of superannuation in legislation, has backed calls for the inclusion of an adequacy measure to help individuals understand how much they realistically need to retire comfortably.
"While defining the role of superannuation as being to 'supplement the age pension' is a positive step forward, taken in isolation, it is quite subjective as it is relative to the standard of living enjoyed by the member prior to retirement," UniSuper chief executive Kevin O'Sullivan said in a statement.
"It is important for retirees to be able to maintain their standard of living in retirement equivalent to what they enjoyed while working. While that can quite often be done on a lower income, it varies for each individual."
Traditionally superannuation funds have relied on the ASFA Retirement Standard of $59,619 a year for a couple and $43,372 a year for a single individual to benchmark how members are tracking retirement income adequacy.
As part of their redefinition process, UniSuper is advocating for the use of salary base targets, akin to defined benefit schemes, which measures an individual's retirement income as a percentage of their pre-retirement salary.
"Defined benefit schemes have often been designed to deliver a retirement income stream of around 70% of pre-retirement salary," O'Sullivan said.
"While replacement rates are a matter of personal choice - an individual may choose to consume more now while still relatively young and healthy - the 70% replacement rate has proven globally to be a realistic and effective level."
"A 'percentage of salary replacement' model more accurately reflects individuals' circumstances, and is practical and simple to use and apply," Mr O'Sullivan concluded.
UniSuper is working with global advisory firm Willis Towers Watson to develop a deeper understanding of the retirement preparedness of its members.