In accordance with section 52AA(2) of the SIS Act, the Trustee has established this Strategy for the benefit of Members of the Plan who are retired or approaching retirement with the aim of assisting those Members to achieve and balance the following objectives:
- to maximise expected retirement income over the period of retirement;
- to manage the expected risks to the sustainability and stability of retirement income over the period of retirement, including longevity risks, investment risks, inflation risks and any other relevant risks;
- to have flexible access to expected funds over the period of retirement.
The Trustee recognises that Members’ circumstances are different and the best way to balance the above objectives will vary across the membership. Therefore, the Trustee has adopted a three-pillar approach that supports Members to make the most appropriate retirement income choices for their own personal circumstances.
Pillar 1: Member education and communication
Consistent with the Member research that highlighted Members have an openness for learning and education, Qantas Super offers tailored content to Members in the form of newsletters, webinars, seminars and other resources. Qantas Super’s Learning Hub is designed to help in a number of areas for Members who prefer to self-serve. Current examples of topics relevant to retirement include retirement planning, retirement needs, retirement budgeting and the Age Pension. Additional content includes dedicated webpages for ASFA’s Retirement Standard, flexibility of accessing super, insurance (up to age 70), contribution strategies and investment choice. The information provided to Members is regularly reviewed to ensure it is topical and relevant and engaging.
Qantas Super’s Learning Hub also provides member education resources, including budgeting tools and expenditure calculators to identify income and capital needs over time. The educational material is designed to educate Members on some of the key risks that they will face in retirement (e.g. investment, longevity, inflation) and how these can be mitigated or managed. The Learning Hub also provides factual information about key retirement topics, such as eligibility for the Age Pension, the types of Income Accounts available and availability of general or personal financial product advice.
Qantas Super provides a retirement calculator to help Members project retirement balances and simulate retirement incomes. The calculator is designed to estimate total retirement income, including anticipated benefits from the Age Pension and non-super investments. The calculator refers to reasonable long-term assumptions with respect to investment returns and inflation, which can be modified by the Member. The calculator also illustrates how Members can have flexible access to funds (e.g. increase or decrease drawdown, ad-hoc commutations), which is available in Qantas Super.
Recognising that a fulfilling retirement is not only about retirement income, it is proposed that the Learning Hub will be expanded to include a specific Health & Well-being section with relevant content.
As ‘health’ was rated as the #1 priority in retirement, in addition to educational content resources, we also provide free access to MetLife’s 360Health Virtual Care and include the offer of this service in regular communications to this cohort. This service provides Members and their families with several online and telephonic resources in areas of mental health, nutrition, and disease management. This is vital for Members as they start to think of enjoying a more holistic retirement.
Content emphasising the importance of staying connected to the Qantas Family post work will also be created.
Pillar 2: Help and advice
Qantas Super offers Members in, or approaching, retirement access to a range of advice options at no additional cost from an in-house team of licensed advisors. For Members with more complex needs, Qantas Super Members have access to comprehensive advice through Qantas Super’s partnership with Guideway Financial Services. Examples of relevant advice topics include investment and drawdown strategies. Additionally, advice topics cover the Age Pension including asset tests, income tests and the impact of deemed income.
Pillar 3: Product solution
Qantas Super offers Gateway Income Accounts for Retirement Members and Transition to Retirement Members. Gateway Income Accounts offer default investment and drawdown strategies that prioritise retirement incomes ahead of passing on wealth to the next generation. These default strategies also cater for those that do not require or seek advice.
Gateway Income Accounts also offer investment choice, so that Members can choose an investment option that best suits their own risk appetite.
Investment and inflation risks are predominantly managed through the robust offering of diversified investment options to cater to all risk profiles. Except for the low-cost Thrifty investment option, Qantas Super’s non-cash investment options are all actively managed. Further, Qantas Super’s advice offering supports risk management which can be tailored for each Member.
New income accounts for Retirement Members currently receive a discretionary pension bonus which is currently capped at 0.7% of the opening balance, up to the Transfer Balance Cap. This bonus reflects the tax saving that occurs when Members transition from an accumulation account to an account-based pension.
The key challenge for our Product solution pillar is the lack of awareness, understanding and demand for ‘longevity style’ products such as annuities by our Members. That is, there is a substantial gap between the theoretical benefit of these types of products and the member demand for them. This was highlighted in the recent Member research project where there was no overt desire for any additional product solution.
Also, the recent Trustee Board announcement to explore merger options limits the case for developing additional product solutions.
However, Management recognises the importance of educating Members and so will expand the education material provided on the Learning Hub to start the process of educating Members on ‘annuities’ (a topic that is not widely understood by this cohort) and other ‘longevity style’ products. Straightforward explanations around these will be provided on the Learning Hub with additional more complex product advice offered through Qantas Super’s partnership with Guideway Financial Services.
Review of Strategy
The Trustee has established Member outcomes relating to the Fund’s account-based pension section. These outcomes are reviewed annually as part of the Trustee’s Member Outcomes Assessment. The impact of the Trustee’s Strategy on Members will be reviewed at least annually, generally in conjunction with the Trustee’s Business Performance Review.
This Strategy will be reviewed by the Trustee at least every three years and may be reviewed earlier as determined by the Trustee, for example on the occurrence of any one of the following events:
- a significant change to the Plan’s demographics;
- an event or circumstance arising from the annual Member Outcomes and Business Performance Review assessments;
- a significant change in the market in post-retirement products that the Trustee considers could have a material impact on the Strategy; or
- relevant legislative or regulatory changes which would require earlier updating of the Strategy; for example, on the introduction of a Prudential Standard or guidance on retirement incomes or if the Regulator requires a change to the Strategy.
The Member Experience Committee will review and approve the Retirement Income Strategy at least every three years, noting that any required product changes will be approved by the Trustee Board.