Staff disconnect as RIC draws closer

28 June 2022
| By Liam Cormican |
image
image
expand image

Most superannuation fund product managers have low awareness of their fund’s Retirement Income Covenant (RIC) strategy or do not think their fund is ready for the 1 July legislation deadline, according to research.

This was despite most senior executives believing their fund had a well-articulated RIC strategy, according to CoreData research commissioned by Challenger, consisting of one-on-one interviews and quantitative surveys of 43 professionals working at 19 super funds.

Leaders were also divided on how to operationalise their strategy with half expecting to further develop their internal capability while two in five were seeking solutions from partners to help plug gaps in their knowledge base (such as institutional term annuities and the decumulation investment mandate).

However, it was longevity solutions for managing longevity risk that topped the list for super funds needing expert support. At 89%, demand was twice as high as any other gap in the solutions funds needed to support their RIC rollout. Two in three funds said they would outsource longevity risk to third parties while one in four funds did not know if they would do this.

CoreData Global chief executive, Andrew Inwood, welcomed super funds’ interest in expert support for managing longevity risk for their members.

“What’s unique about longevity risk is that it’s specific to retirees and needs a specific solution. Managing investment strategy is only part of the answer; it will not solve longevity risk.

“The internal capability a super fund needs to implement a longevity solution or mitigate longevity risk is considerable in terms of their operational capability and liability management.

“Partnering with an expert will enable a fund to bring a compliant, fit-for-purpose retirement income product to market quickly with fewer internal resources dedicated to longevity protection.”

Read more about:

AUTHOR

Recommended for you

sub-bgsidebar subscription

Never miss the latest developments in Super Review! Anytime, Anywhere!

Grant Banner

From my perspective, 40- 50% of people are likely going to be deeply unhappy about how long they actually live. ...

10 months 2 weeks ago
Kevin Gorman

Super director remuneration ...

10 months 3 weeks ago
Anthony Asher

No doubt true, but most of it is still because over 45’s have been upgrading their houses with 30 year mortgages. Money ...

10 months 3 weeks ago

The superannuation industry will be judged by its member services rather than how effectively it accumulates wealth, according to Stephen Jones....

17 hours ago

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....

17 hours ago

The profit-to-member super funds are officially operating as a merged entity, set to serve over half a million members. ...

3 days 16 hours ago