PLSA Chair Richard Butcher sends an update from the second day of the ASFA conference in Australia.
Day two of ASFA, unlike day one, was given over to smaller streamed sessions that considered a variety of matters, some Aus specific, others more generic.
The first conversation I dipped into was around engagement and how to measure its success.
Pension comms here, as in the UK, has been built from the bottom up - a need for legislative or regulatory reason to provide information. While compliance is important there is an increasing sense of frustration that this drives engagement from the wrong direction: the objective is based not on asking “how can we improve outcomes for members” but on asking “how can we be compliant”. This is starting to turn around but as it does it raises new questions: What does success look like and how do we measure it?
The first of these questions is relatively easy to answer, in the abstract at least: more members achieving the standard of living in later life that they aspired to. Measuring that is also relatively easy - although only with the benefit of hindsight. The challenge remaining is how to proactively measure success against that objective - so that interventions can be made early enough to remedy a prospectively negative outcome.
Bill McNabb of Vanguard is thinking about the investment component of this already. They, Vanguard, are working on algorithms to calculate individual personal investment return objectives. This will only work, however, if there is a sense of the desired income outcome (maybe a Retirement Income Target?)
The second conversation I dipped into was around governance. A number of speakers reminded the delegates that the fiduciary’s responsibility is to the member “we must do what is right by them, they are our first responsibility” but also “there is no problem with making a profit providing you are also delivering for the member”.
APRA (the Aus body that combines the functions of TPR and the PRA) told me there are approximately 260 trustee bodies (and it seems these are incorporated), staffed by around 1,600 trustee directors - some sponsor “representative”, many independent and a number member appointed. It is the trustee body (as opposed to the scheme) that is authorised and so subject to tests on fitness and propriety, access to resources, risk control and business plans. They’re also tested on knowledge (tested at a board level) and encouraged to be diverse (albeit without quotas). While the community is generally in good shape, APRA is not complacent in driving up standards.
The third conversation I dipped into was around wellbeing in retirement.
This was a wide ranging discussion that started by dismissing the notion that life is linear: learn, work, retire. In a world where life expectantly is increasing and technology moves so fast, it was argued, those three components become circular: learn, work, retire for a bit (maybe an adult gap year), retrain, work some more and so on. It then asked questions about how to make each of those components successful and, in particular, in later life what does good look like.
The discussion started to set a framework for what a good retirement could look like in the post white linen couple walking along the beach world. It left hanging the question “can we ignore the quality of later life when delivering good member outcomes?”
I also picked up a couple of other interesting snippets.
One speaker lamented the fact that Australians still use the word “superannuation”. When I started work I used to laugh because they did so. More recently I’ve realised they got it right. They now have “super” whereas we have “pension”. As a brand I know which I prefer.
In Aus, employer pension contributions are compulsory (there is no opt out) but the employee can decide where they want them paid. To make this easier, in a world where too few people engage, the employer will offer a default pension arrangement. The result of this is that they have a small pots problem!
More from the final day of ASFA tomorrow.