These investment options place TelstraSuper at the forefront of the industry-wide push to develop tailor-made superannuation income products for post career members.

Over the next five years, it is forecast that over 1.8 million members and $300bn in superannuation savings will move from the accumulation phase to decumulation*. As members move from accumulation to drawing down on their superannuation they face a number of challenges that are amplified when no longer working. Market volatility, sequencing risk and need for an income stream are all factors that to date have not been considered in enough detail for product choices for retirees within superannuation funds.

What do the Lifestyle investment options offer?

Our new Lifestyle investment options directly address these challenges by offering investments within superannuation that produce a sustainable and consistent income, provide greater tax efficiencies, and manage retirement specific risks such as drawing down on superannuation during a market downturn and providing income sustainability throughout retirement.

TelstraSuper CEO Chris Davies said as the Australian population ages, superannuation funds will a have a critical role in helping members navigate the specific financial challenges of retirement.

“Superannuation balances will continue to increase in both size and importance; individuals retiring today can expect to spend around 20 years on average in retirement,” Mr Davies said.

“TelstraSuper recognises that members who are drawing down on their superannuation have different requirements and investment risks to members who are working and accumulating superannuation, and as such, products should be designed specifically to resolve these challenges.”

“This provides an opportunity, and a need, for superannuation funds to innovate and develop new products that allow retiree members to take advantage of both strong investment returns while offering downside protection and mitigating longevity risk. These new investment options follow the launch of our new digital retirement website for our income product members last July. ”

A smarter way to use cash

The four LifeStyle investment options: Lifestyle Growth, Lifestyle Balanced, Lifestyle Moderate, Lifestyle Conservative; are specifically designed to grow and preserve capital, manage volatility, be tax effective and sustain income for members who are no longer contributing to their super.

To help deliver a consistent and sustainable income, the Lifestyle product suite includes a new industry-leading cash allocation feature that allows members to automatically allocate some of their investment to their cash investment option each month.

Members can then draw a regular, consistent income from this cash investment option while also managing volatility by transferring small amounts, more often, into the cash option.

This distinctive cash allocation feature will reduce the risk associated with drawing down in bigger proportions during market downturns and also deliver retirees a stable income that is sustainable over the long term.

Retirement legislation sets the new standard

The Federal Government recently unveiled draft legislation to introduce a Retirement Income Covenant, requiring superannuation funds to have a retirement income strategy to assist their members in retirement.

TelstraSuper CIO Graeme Miller said the draft legislation reinforced the path that TelstraSuper has been on for some time in developing tailored retirement investment solutions.

“Often existing superannuation products and investment choices have been adapted for those in retirement, without fully taking into account their unique circumstances,” he said.

“We have developed a suite of investment options that are purpose-built for retirees, delivering a sustainable income while managing volatility and market risks.”

“When you are young, volatility can be your friend, giving you opportunities to buy into the market at lower price points. When you are retired, volatility can be your foe, as you may be forced to sell at lower price points. Having products that are purpose-built ensures these considerations are factored into the retiree’s investment choices.”

Income is the name of the game for retirees

Research conducted by Investment Trends^  found retiree members said generating sustainable income, providing certainty of income and generating guaranteed income for life were the top three appealing features on superannuation in retirement.

Graeme Miller said members are not just entering a new ‘decumulation’ phase, we are asking them to reconsider how they think about their wealth.

“When you are retired, you are looking for different outcomes from your superannuation investment. The mindset switches to having an income and making your savings last,” Mr Miller said.

“Income becomes the most important feature of superannuation, and not just the amount, but more so the lifestyle that income affords in retirement.”

“This Lifestyle product suite provides TelstraSuper with an opportunity to be the preferred superfund for retirees through cost effective and differentiated products tailored to retirees’ income needs.”

Need to talk about it?

If you want to talk about your retirement income but don’t know where to start, give us a call on 1300 033 166 or request a call back online. 

You can get general and simple advice about your TelstraSuper account for no additional cost – it’s part of your membership. If you want more personal advice you can make an appointment with Telstra Super Financial Planning for more comprehensive advice. Talking to a professional about your finances could help you get a feel for whether you’re on the right track and how to make the most of your financial future.

 

* KPMG Super insights Report of March-2020
^Investment Trends 2021 TelstraSuper Superannuation & Retirement Report (n = 1000 TelstraSuper members)