Our aim

Identifying the needs of our members as they approach retirement, when they retire and their life in retirement is very important.

The needs, beliefs and expectations of members approaching retirement are often different to those of members already in retirement and all members are individuals with their own goals. Whatever financial life in retirement the member is aiming for, we want our members to achieve a balance between 3 key objectives once they are in the retirement phase of their super journey:

  1. Maximise retirement income
  2. Have flexible access to their capital
  3. Manage anticipated risks

1. Maximise retirement income

Retirement income can include money from superannuation, the Commonwealth Age Pension, share dividends, rent from investment property and more.

A member’s super balance at retirement, how they access and invest their superannuation, their retirement age and their eligibility for the Age Pension all factor into a member’s retirement income.

2. Flexible access to their capital

The way members choose (or need) to spend their money in retirement is important.

Some members will invest all of their superannuation into an income stream to draw a regular income as soon as they retire, some will invest part of their super in an income stream while also drawing out lump sums from their super for larger expenses either at retirement or throughout retirement, and others have alternative income and won’t need to access their superannuation as a regular income at retirement (though they may choose to access it later in life).

Our membership includes members in an accumulation scheme, in defined benefit “lump sum” schemes and in a defined benefit lifetime pension. These members all have different rules around when and how they access their superannuation benefit at, after or even before retirement.

Additionally, the way members spend money in retirement changes over time. Our own research of members aged 55+ tallies with other research which says that planning for aged care is not an area that Australians think about when retirement planning (or when in early retirement). This is despite it potentially being a large outlay when the time comes. Therefore, this objective of “flexible access to capital” also needs to take into consideration those costs that many people will incur later in life but are not considering at the point they retire.

Educational materials around aged care have been prepared to help members self-educate and will continue to be reviewed and developed as appropriate.

3. Managed anticipated risks

There are 3 main risks that this strategy aims to deal with. These are:

  1. Longevity risk. Either the risk that:
    • the member may outlive their superannuation, or
    • the member may live a lower quality of life in retirement and go without necessities to ‘save’ money. When they die, they leave a large balance which they could have enjoyed through their life.
  2. Investment risk:
    • That negative investment returns reduce a member’s retirement savings, or
    • That timing does not work in the member’s favour, reducing retirement savings, changing their retirement date, etc.
  3. Inflation risk:
    • That the rate of inflation exceeds the returns on retirement savings, reducing the member’s buying power over time.

Our cohorts

We have divided our membership into age-based and income cohorts for this strategy. The cohorts bring together members who will likely find the same information and support useful. They are:

  1. Aged 55+ and approaching retirement
  2. Retired on a “modest” income (as per the ASFA standard) or below
  3. Retired on a “comfortable” income (as per the ASFA standard)
  4. Retired on an “affluent” income or above (>$55,000 per year)

Over time, as more detailed information is available about member adequacy, these groups may be revisited and refined.

Our strategy

Each member’s individual situation is different. We have developed this retirement income strategy to support all members to achieve their desired outcomes, balanced against the 3 risks above.

We have focussed on members who are not in the defined benefit lifetime pension. This is because lifetime pensioners typically access their pension as designed and do not need to consider financial longevity or investment risks as part of their retirement planning.

This strategy aims to ensure members have access to the right support and guidance as they approach retirement, enter retirement and throughout their life after they’ve retired.

The strategy is based on 2 key foundations which apply across all cohorts:

  1. Member education
    • Member Services appointments
    • Online self-education
  2. Product offerings
    • Income Stream (retirement phase or transition to retirement)

1. Member education

Our members have access to self-education materials and to one-on-one meetings with specialised Member Services staff members, all at no cost.

They have access to single-topic advice through the Helpline about their investment choice, insurance and contributions, again at no cost.

The self-education materials available to members include:

  • Short single topic videos
  • ElectricSuper website, incorporating the Learning Hub
  • Calculators:
    • Retirement projection
    • Are you on track?
    • What do you spend now?
  • Preparing for Retirement booklet
  • Member scheme booklets
  • Ongoing targeted communication

For members to have a combination of self-service options and access to a superannuation professional in the Member Services team allows members to access relevant information in the way or ways and at the time that best suits them.

Helping members to understand their options at retirement and where they can source further information (such as Services Australia, etc) is at the heart of what we do. Work is ongoing to ensure that members have access to the best and most relevant superannuation information available.

2. Product offerings

Members typically retire with a lump sum superannuation benefit which they need to invest (or otherwise manage).

ElectricSuper’s Income Stream is a vehicle available to members and their spouses. Members may choose to use the Income Stream to invest some or all of their superannuation benefit and to draw a regular income and/or lump sums from it throughout their retirement.

The Income Stream gives members access to their money as they need it while also allowing them to choose their own investment strategy to protect their investment in line with their own risk profile.

The Income Stream can also be used for transitioning to retirement (once a member has reached their Preservation Age).

Our survey of Income Stream members showed that members were typically happy with their Income Stream and felt that it met their needs. They felt they had received all the information they needed prior to opening an Income Stream and, importantly, knew they could access lump sums and that they were aware of the impact of doing so.

The Income Stream is the key product that ElectricSuper can offer members reaching retirement.

The Age Pension

The Income Stream is designed to work alongside the Commonwealth Age Pension.

While some members are not eligible for the Age Pension at the time they retire, due to their age or a high balance in their Income Stream or other assets/income, for other members the Age Pension and Income Stream pension will work together from day one. Members who are not eligible for the Age Pension when they retire may become eligible later as the balance of their Income Stream account reduces (as they withdraw an income from it). The Age Pension ends up forming an important part of most members’ retirement incomes at some point.

Depending on the member’s situation, the Age Pension may supplement the income they receive from an Income Stream, or the Age Pension may make up the bulk, or all, of their income.

By combining the Age Pension with the Income Stream, some of the risks mentioned above may be mitigated:

  • Longevity risk: supplementing with the Age Pension allows super money to last longer in retirement, and the Age Pension is paid for life
  • Investment risk: having the ‘safety net’ of the Age Pension may allow members to make investment choices that better suit them and are more likely to provide them with the returns they desire
  • Inflation risk: The Age Pension is indexed which may provide peace of mind.

Our Member Services team works with members to help them understand the interplay between an income from their superannuation money and from Services Australia. They also help members to understand more about where they can find information about eligibility for the age pension. This can include explaining recontribution strategies and providing contact information for members to speak to a Financial Information Service Officer at Services Australia.

Our next steps

To provide the 3 main aims to members (that is, maximising retirement income, allowing members flexible access to their capital and helping members manage anticipated risks), we will focus on:

  1. Collecting further feedback from members
  2. Continuing to encourage members to engage with us in one-on-one appointments
  3. An uplift of targeted communications to members approaching retirement to build engagement and promote self-education
  4. Continuation and expansion of targeted communications program to members after retirement to build loyalty and share relevant information
  5. Developing and promoting further online resources for member self-education
  6. Reviewing our retirement investment products and options to ensure members continue to be provided with a suitable choice of post-retirement product(s) and relevant, accurate information to allow them to make an informed decision
  7. Undertaking research into member adequacy to ensure we know our members
  8. Reviewing our insurance offering (during the accumulation phase) to ensure members are paying only for cover that offers value for money and is competitive in the marketplace
  9. Reviewing this strategy and the outcomes that members are achieving over the next 3‑5 years.

Approved by ElectricSuper’s Corporate Governance Committee on 26 November 2023.

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