February 2009

Post-Retirement Solutions
The AustralianSuper experience Paul Souter
Product Manager

Who is AustralianSuper?

All profit to members, multi-industry fund created on 1 July 2006 through the merger of the Australian Retirement Fund (ARF) and the Superannuation Trust of Australia (STA). We have more than:
1.4 million members 110,000 employers $26 billion in funds under management

Three main divisions in addition to the industry division

Personal Corporate Retirement

November 2008

Member Briefing

AustralianSuper Retirement Division

The Retirement Division was established on 1 January 2008 and represents a long-term strategic commitment by the Fund.
Not defined by a single product or point in time. Contemplates a profusion of products and services
Account based pension Advice Consolidation service -- Transition to Retirement Pension -- Financial Planner Referral -- Tools & calculators

Is cognisant of those members for whom a retirement income stream may not be appropriate
Low balances less than $100K (40% of 55+ members) Probable full or partial reliance on Government Aged Pension Provision of education and advice that is relevant to them.
November 2008 | Member Briefing

Insource vs outsource

Consideration was given as to whether to continue with the outsourcing arrangement or bring retirement services in-house
The Fund had an historical outsourcing arrangement to the IRIS pension. Ultimately decision made to bring in-house
Assessment of member segment needs vs ability to satisfy needs better than the existing arrangement Eligible membership base was significant and continuing to grow Marginal take-up rates and significant attrition Control and quality of product and outcomes

Desire to establish a simple, low cost and compelling product that was in the best interests of members
November 2008 | Member Briefing

Organisational challenges

Historical focus had been on wealth accumulation as opposed to de -accumulation Building organisational conviction around the magnitude of the opportunity across all levels of the business Partnered with IFFP and Superpartners to mitigate relatively low position on the experience curve
Significant programme of works to educate and up-skill existing staff Recruitment of staff with pensions experience to embed in the call centre Establishment of specialist team to handle and clear escalation process to handle complex enquiries
Included 3 Associate Financial Planners from IFFP

Drew on the experience of key suppliers and industry professionals to gain insights into segment behaviour and the implications on operational processes.
November 2008 | Member Briefing

Technology challenges

The specific needs of post retirement members have significant implications on the suitability of technology solutions.
Primary backend administration system Transactional member interfacing systems Public domain Integration and development with satellite or legacy systems
CRM IVR Reporting databases Ancillary registry systems

November 2008

Member Briefing

Financial challenges

The financial costs associated with entry into the post retirement can be significant and present issues around cross subsidisation
Technology, marketing, research , legal, administration add up quickly Implications for product/service pricing
Desired payback period 5 years Represent good value compared to competitor offering Possible trade-offs in product/benefit design

Product pricing appears to have been well received in the market

Yr 1 take-up rates in excess of those forecast Overall MER continues to be below the ALL Fund Median

November 2008

Member Briefing

Year 1 results

Demand for the AustralianSuper pension has reaffirmed the funds commitment to investing in this space.
As at 31 December 2008
Cumulative pension membership of 2506 (1.3% of 55+ membership) FUM $626m (2.2% of total FUM) 62% registration and usage rate for PensionOnline

Product and service development pipeline

Introduction of a specialist team dealing with Transition to Retirement Continued process enhancements associated with replacement of backend administration platform Feasibility of new products and services dealing with the specific issue of longevity risk

November 2008

Member Briefing

February 2009

Thank you