POWERED BY MOMENTUM MEDIA
Don't limit lifecycle products to age, says Dimensional
Dimensional has praised the Government for allowing lifecycle options within MySuper products, but warned against limiting them solely to age at retirement.
In a submission to the Parliamentary Joint Commission into MySuper, fund manager Dimensional pointed to section 29TC(2) of the draft MySuper bill which outlines the 'lifecycle exception'.
The section states that lifecycle options can be based on age only, or "the age of members and other prescribed factors in prescribed circumstances".
According to Dimensional, the "other prescribed factors" should include: member salary and contribution rates; personal retirement income objectives; desired retirement age; members' personal investment experiences; and the age pension.
Lifecycle products that only take age at retirement into account, or "target date funds", are limited because they aggregate individuals' assets according to one factor: their retirement date.
"A simple lifecycle product based solely on the age of individual members ignores the fact that members still have individual goals in terms of the level of income they will require at the end of their working lives," the submission said.
Dimensional argued that trustees should not be barred from seeking to personalise the investment process just because a member had selected the default option.
"While our solution still supports the concept of 'auto-pilot' and minimal member engagement, it is designed to more clearly reflect each member's retirement destination and makes adjustments to the 'flight path' when economic or member circumstances dictate," the submission said.
Recommended for you
The future of superannuation policy remains uncertain, with further reforms potentially on the horizon as the Albanese government seeks to curb the use of superannuation as a bequest vehicle.
Superannuation funds will have two options for charging fees for the advice provided by the new class of adviser.
The proposed reforms have been described as a key step towards delivering better products and retirement experiences for members, with many noting financial advice remains the “urgent missing piece” of the puzzle.
APRA’s latest data has revealed that superannuation funds spent $1.3 billion on advice fees, with the vast majority sent to external financial advisers.
TOP PERFORMING FUNDS
ACS FIXED INT - AUSTRALIA/GLOBAL BOND
Fund name
3y(%)pa
1
Global X GlobalX FANG+ ETF
33.51 3 y p.a(%)
2
Spire Oaktree Opportunities XI Second Close
32.68 3 y p.a(%)
3
DomaCom Lot 21 Chellaston Road Munno Para West SA 5115 Australia
31.62 3 y p.a(%)
4
Spire Oaktree Opportunities XI First Close USD
31.36 3 y p.a(%)
5
Fidante Credit Suisse Global Private Equity
29.60 3 y p.a(%)
