When I’m thinking about strategy I like to know what success looks like. Or better still, what is ideal?
Today in Australia we have a good superannuation system. We have a means-tested age pension, compulsory saving through the superannuation guarantee and there are incentives for voluntary contributions. Together these three pillars make up a system which is praised by many around the world.
Yet, as an industry, we need to do better.
You see I define ‘ideal’ as a well-funded member who is happy they can rely on the superannuation industry. That is, a member who has accumulated an adequate account balance at the point of retirement, and who is comfortable they can rely on their super fund to manage this to deliver a stable income for life.
In the late 1980s we had a super revolution. It brought radical change in the form of award super and later the superannuation guarantee. Before this super was the preserve of white collar and public sector workers. This revolution delivered greater equality and it went a substantial way to addressing poverty in old age. It showed leadership by people who cared about people.
This first revolution was all about inputs. Getting dollars and assets into the system and building good quality institutional investment. All of which is absolutely critical to where we need to get to.
Now I’m calling for a second super revolution.
However this one is about outcomes. This revolution is about delivering reliability to the millions of super fund members across Australia. By which I mean the reliability to manage the superannuation assets you accumulate over your working lifetime to deliver that stable, real income for you, for life.
How do we do this? We need to appropriately quantify and manage the risks you face. We need to think in terms of what you experience as a member, not some compound average return ranking that you read about in the papers. It involves thinking in terms of managing your assets (your account balance) to meet your liabilities (your living expenses in retirement). We need to think about collective decumulation vehicles, risk pooling for long life, and tailored investment strategies.
This is how we think at QSuper. And this is what my colleagues in the Investment team are going to be writing about on this blog. They are going to share with you the steps we have taken and those we’ve yet to take that will move us along the path to achieving ideal.
It’s time for the super industry to step up and deliver reliability. As Australian super funds, we need to lead this revolution. We are in a unique position to do this. I look forward to hearing your thoughts and to sharing more of ours through this blog.
The views of the author and those who provide the responses to comments posted on this blog are not necessarily the views of QSuper. This information is for general purposes only. It is not intended to constitute advice and persons should seek professional advice before relying on this information.
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