not super yet

1 © 2015 Deloitte Touche Tohmatsu

Not super yet…

Stephen Huppert

Partner, Deloitte

@stephenhuppert

2 © 2015 Deloitte Touche Tohmatsu 2 Compliance Considerations © 2013 Deloitte Touche Tohmatsu


Congratulations on your retirement. Here’s your superannuation benefit.

Thanks for playing…



Source: ABS,

Let’s start with some demographic statistics courtesy of the ABS

2015 2045

http://www.abs.gov.au/websitedbs/d3310114.nsf/home/Population%20Pyramid%20-%20Australia

http://www.abs.gov.au/websitedbs/d3310114.nsf/home/Population Pyramid - Australia




5 © 2015 Deloitte Touche Tohmatsu 5 © 2015 Deloitte Touche Tohmatsu

Life expectancy and pension age

40

45

50

55

60

65

70

75

80

85

90

1881-1890 1946-1948 1975-1977 1994-1996 1999-2001 2004-2006 2010-2012

Life Expectancy at Birth

Life Expectancy at 65

Pension Age

Males, ABS Life Tables


Future life expectancy and pension age

60

65

70

75

80

85

90

95

2010 2015 2020 2025 2030 2035 2040 2045 2050 2055

Life expectancy at 65 Current Pension Age

NCOA Proposed Pension Age Govt Proposed Pension Age

Govt Proposed Pension Age2 ?

Males, ABS Life Tables



What is success for the superannuation system?

What is success for a superannuation fund?

Melbourne Mercer Global Pension Index



What is success for the superannuation system?

What is success for a superannuation fund?


Superannuation has been, and will continue to be, a great success and the

envy of the world…

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

1997 2000 2003 2006 2009 2012 2015 2018 2021 2024 2027 2030 2033

$ b

illi

on

s

APRA market statistics to

30 June 2012

Deloitte projections from

1 July 2012

~1.0 x GDP

~1.8 x GDP



What is the purpose of a superannuation fund?


Pillars of a retirement income system

Pillar 1 Age pension

Pillar 2 Compulsory superannuation contributions.

Pillar 3 Voluntary superannuation contributions and other savings

0.0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

1.0

55 56 57 58 59 60 61 62 63 64

65-6

9

70-7

4

75-7

9

80+

Age

Households Persons

Source: Superannuation Policy for Post-Retirement, Productivity Commission Research Paper

Share of people with

super remaining



Financial System Inquiry recommendations

Objectives of the superannuation system

Seek broad political agreement for, and enshrine in legislation,

the objectives of the superannuation system and report publicly

on how policy proposals are consistent with achieving these

objectives over the long term.

The retirement phase of superannuation

Require superannuation trustees to pre-select a comprehensive

income product for members’ retirement. The product would

commence on the member’s instruction, or the member may

choose to take their benefits in another way. Impediments to

product development should be removed.


The strategic objective of a superannuation fund is…

Maximise Members’

Retirement Outcomes

Net Investment Returns

Operating Costs

Products & Services

Member Behaviour



…and peace in the Middle East

CIPR: comprehensive income product for retirement

Desired features of retirement income products



Trade offs in providing for old age



Myth: Australia has a lump sum culture…

0

5

10

15

20

25

30

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

$b

Value of lump sums

Value of income streams

0

10

20

30

40

50

60

70

80

90

100

0 - 50 50 -100

100 -200

200 -300

Over 300

Total

Pe

r c

en

t o

f b

en

efi

ts

Lump sum Account-based pension

Source: Superannuation Policy for Post-Retirement, Productivity Commission Research Paper


Retirement income products in Australia

94%

5%

1%

Account based pensions

Annuity products

Hybrid products

Source: Mercer Post Retirement Market Trends in Australia, June 2014


Post Retirement Risks

Financial Risks

• Inflation risk

• Interest rate risk

• Stock market risk

• Business risk

• Employment risk

Information and public policy risks:

• Lack of appropriate information risk

• Public policy risks

Care and housing risks

• Changes in housing needs risks

• Loss of ability to live independently

risk

• Health care risk

Personal and Family risks

• Longevity risk

• Change in marital or partnership

status risk

• Unforeseen needs of family members

risk



Some innovation, but more required…






Pillar 4 ????


Connect

Stephen Huppert

Partner, Deloitte

[email protected]

au.linkedin.com/in/stephenhuppert

@stephenhuppert



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