In a bid to combat this, as well as market volatility, sequencing risk and a need for an income stream, TelstraSuper has unveiled a new range of income investment solutions.
Chief executive Chris Davies said Australian superannuation funds will play a critical role in helping members navigate the challenges of retirement over the coming years.
“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.
“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.”
TelstraSuper’s lifestyle investment options have been specifically built for retiring Australians and designed to grow and preserve capital, manage volatility and sustain income for members who are no longer contributing to their super.
The move comes on the back of government’s draft consultation for its retirement income covenant, set to take effect in 2022, which will require funds to have a retirement strategy in place for its members.
In August, life insurer TAL and industry body the Australian Institute of Super Trustees (AIST) called for an extension of the intra-fund regime alongside the commencement of the covenant.
TelstraSuper CIO Graeme Miller added that the covenant reinforces the need for funds to develop tailored retirement investment options.
“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,” he said.
“Having products that are purpose-built ensures these considerations are factored into the retiree’s investment choices.”