Aware Super boosts member outcomes with MySuper LifeCycle changes

Aware Super is increasing the number of stages in its MySuper LifeCycle from two to 11 on 10 June 2021. Aware Super head of member growth, Peter Chun, explains what was behind the decision and how it will ultimately help members have more money at retirement.

What prompted the decision to increase the number of stages in your MySuper LifeCycle Option?

We made this decision to deliver better retirement outcomes for our members, by helping them to retire with more.

This really is an extension of how we already invest differently for our members as they near or reach retirement, to better balance the risks in their portfolio and reduce the potential for sequencing risk.

Through these changes our modelling suggests that our younger members, in their 20s, could conservatively be $30,000 better off in their retirement. If markets are favourable this could be as much as $170,000 more in retirement savings.

For an average member in their 40s, we expect their retirement balance could increase by $16,000. If the markets are favourable this could even be as high as $68,000.

While the advantages are not as significant for members nearing retirement, they are still important. These changes could see a member in their 50s conservatively retire with an additional $5000 or more at retirement; valuable additional savings to help them to achieve the kind of retirement they want and deserve, while still helping them to safeguard their savings in the lead up to their retirement.

That's why we think these changes are so important to our members. By aligning their investment risk to their age and work stage, we can make a significant difference to our members' long-term financial security.

How did you choose the structure for the new options?

Aware Super has invested heavily in our internal data analysis and modelling capability to truly understand our members and how our investment options can deliver them the best retirement outcome.

This expertise is a real differentiator for our fund, and something we believe will deliver for our members now and in decades to come.

Through this modelling and analysis, we have determined what we believe is the best investment approach for our members at different ages and work stages. This underpins our enhanced Lifecycle product.

The real benefit of this is members don't need to do anything. We do all the analysis and research and from that have determined the ideal investment mix for them at various stages of their lives.

The experts in our investment team then consider how to manage our diversified portfolio to support our members at different stages of their work and retirement journey.

You've shifted the 'Grow' option to High Growth from Growth, what was behind that decision?

There have been no changes to our investment options, what we have done is better align the options that our default members, more than 80 per cent of our fund, are allocated to.

The introduction of the High Growth option for all default members under 55 means we'll be giving members the best chance of maximising returns and growing their super.

We are making this change because we know these members have time to ride the ups and downs of market volatility - in fact in their early years member's contributions dominate their account balance, which means when the market falls it is a buying opportunity for them.

Returning 9.8 per cent per annum over 10 years to 31 December 2020, our High Growth option has outperformed the top performing MySuper option over the same period.

Conservatively our modelling shows an average 45-year-old member could be $16,000 or more better off in retirement, while younger members could benefit by $30,000 or more.

That is a significant boost to their retirement savings without our members needing to do anything.

This change is all about helping our members to feel more confident and secure in their retirement; and support them by taking the guesswork out of how to invest their super as they move through life.

Of course, like now, any members who would prefer to choose their own investment approach are able to do this. We would recommend they contact us to discuss their needs and the best option for them.

Most of the tailoring is now in the 'Manage' ie 55 to 65 cohort - will you be looking at offering more tailoring in the 'Grow' cohort, say around major life events?

No, there are no current plans to offer more tailoring during the 'Grow' phase. That's because we know that while many life changing events can occur for members under 55, they still have time to absorb the ups and downs of the market.

While we're not planning to further tailor the investment approach, there is a lot we are doing to enhance the education, guidance and advice products and tools that we offer to help our members prepare for a better financial future.

For example, helping our members to understand the impact that additional super contributions could have on their lifestyle in retirement can help them to choose whether, or not, that is something they want to do.

We are also here to support members who want to explore individual investment choices, with various advice services to help them to decide what is right for them.

Ultimately everything we do, is to help our members to achieve a better retirement outcome.