Retirement Income Solutions

Project Description

This large superannuation fund sought to develop and introduce a new and retirement strategy in order for its members to be able to achieve better retirement outcomes.

Rice Warner was engaged by the fund to develop and design an innovative retirement solution which could also be communicated to members simply and effectively:

Approach:

  • Rice Warner conducted a workshop with the fund’s key stakeholders, with the aim of providing:
    • A review of pensions member requirements in their retirement years.
    • An in-depth analysis of current retirement incomes products and their value against the objectives.
    • Consideration of innovative solutions which could deal with liquidity (for pension payments) and growth for inflation and longevity protection.
    • Recommendation of a retirement solution/product for the Fund, based on analysis and modelling of its membership and demographics.
    • Guidance on the importance of a well thought out marketing and communication program, linked to financial advice.
  • The fund’s executive team and Board ratified Rice Warner’s recommendation to conduct extensive modelling to develop a two bucket investment strategy, designed to meet members’ retirement income needs and objectives.
  • Throughout the project, Rice Warner worked closely and effectively with key stakeholders such as the Board, executives, operations, custodian and registry platform.

 

Our Response

Design and strategy:

A two bucket strategy was adopted to best meet member retirement objectives, with a Growth Bucket to generate income and capital growth, and a Cash Bucket to meet members’ regular drawdown needs.

A unique distribution strategy between the two buckets was implemented to distribute income and excess returns from the Growth Bucket to the Cash Bucket – from which pension payments are drawn.

Rice Warner worked with the fund to develop member communications and other marketing material to clearly communicate the objectives and benefits to members and fund staff.

Outcome

  • On October 1, 2015, the fund released its new retirement product, named RetireSmart.
  • RetireSmart is the first product of its kinds offered by a superannuation fund, utilising a two bucket and distribution strategy.