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It’s time to do things differently in retirement policy

Amara Haqqani worked with Jeremy Cooper at Challenger for three years before becoming a consultant and policy specialist for Milliman, a leading actuarial firm. She has seen how the retirement income sector works at a policy and theoretical angle, as well as focussing on product creation and distribution. She has moved on from retirement income policy to become Chief Client Strategy Officer with Bennelong Funds Management.


In the course of a casual conversation with my husband recently, I had to explain to him what mortality credits were. He giggled like a pre-teenager. Suddenly ashamed at its absurdity in everyday language and the culture behind it all, so did I.

I’ve spent an amazing six years in retirement income helping super funds and policymakers with their positioning, strategy and product in all things decumulation. In that small amount of time there have been several policy interventions and most recently, the Retirement Income Review.

While my six years is nothing compared with the time spent on this area of finance by others of my industry peers and elders, it's still been a great snapshot in time of the types of conversations we have, the types of decisions that get made by various players in the ecosystem and, in the end, the sorts of things we need to wake up to.

People first, product second

A colleague told me at the beginning of my retirement journey that this is an industry where we like to make products that we want to sell, not that people want to buy.

His throwaway line has proven true, and the evidence of it is everywhere. We remain one of the few industries left on the planet that isn’t client centric, most likely because we haven’t had to be. We’ve had compulsion and information asymmetry and general all-round apathy working in our favour. The groundswell against this movement is already everywhere you look - from the surge in ETFs to the recent GameStop trading event.

The issue is much more acute in retirement strategy. The answer to retirement working in Australia is not the creation of more product ‘innovation’. It is not making them mandatory in regulation, it’s not forcing funds to create products today that will become tomorrow’s legacy product. It is not attacking account-based pensions when they’ve done nothing wrong in isolation.

The superannuation industry and its policymakers need to turn product thinking on its head. Retirement will only succeed in this country when we genuinely put the retirees ahead of the products we’re trying to build for them. Retirees need very basic help that we neglect to provide - help on budgeting, on the age pension, on building their retirement context. Products come after we help them and give them comfort and guidance. Products only help answer aspects of retirement problems, they don’t replace them entirely.

There are some fundamental things that need to change before mandated retirement products will work. Trustees may be required to have a product on the shelf for members, however the take-up may be low at best, or members will mutiny at worst, until some key issues are fixed.

Siloed thinking leads to siloed answers

Retirement isn’t a product problem, it’s also not just an advice problem, nor is it just an investment problem and it’s definitely not just an engagement problem either. In my experience it’s all of them at the same time.

We have a long way to go to overcome this issue. Retirement cannot be solved in silos.

Funds particularly need to bridge internal function lines in order to deliver retiree-centric solutions that work and are taken up over the long term. Until retirement is treated as seamlessly across a super fund as accumulation is, we cannot say that retirement is done well for the members.

Innovation comes at the expense of simplicity

It’s clear we live in an era where the member-investor craves transparency and simplicity. They don’t value things they don’t understand, and there is the meta-trend of the reduction in value placed on experts.

Products that present as ‘black boxes’ are now largely mistrusted, and the ‘smartest people in the room’ affliction we have in the finance industry as economists, actuaries and investment professionals, must give way to understanding that no one out there cares how smart you are if you can’t help them in a clear and efficient way.

The problem with most retirement product innovation is that it's hard to do while still being simple or transparent. Any further pushes for the industry to innovate will drive corresponding legacy product proliferation as products become harder to sell, regardless of how perfect they are on paper.

We really shouldn’t find hard-to-explain products like annuities all that much of a ‘puzzle’ in this day and age. Spoiler alert: much like we’ve discovered that markets aren’t actually all that efficient, just because a product is intellectually perfect for someone, doesn’t mean they actually understand it enough to want it.

Talking about longevity risk means getting comfortable with death

This is not the place to discuss death, or taxes, or death taxes, however until we are comfortable as a society talking about death, we will never understand how to communicate longevity risk, its insurance, or mortality credits.

The actuaries and policy makers of this industry need to find a way to never say these things in public beyond their own modelling. Until society finds a way to talk about death more openly, we will subsequently recoil at longevity risk conversations. Our best-case scenario for engagement on these topics is people devolving to giggles like my husband did.

Capital consumption is a paradigm shift

And finally, the Australian public is not interested in consuming their hard-earned capital. After all, they’ve had generations before them demonstrate that they can preserve their capital and live off the income.

If policy makers want a shift in behaviour in line with changing economic conditions, there needs to be a mass-scale level of education done and awareness raised on this topic, else all policies and products that attempt to tackle it will be rejected.

None of these themes are new of course, and others have raised them before me.

In stepping away from the super and retirement income world in favour of working on some other exciting things, I’m hoping that the industry uses the Review, and the upcoming Covenant, to try to do things a little differently. Let’s not build retirement products because we have to. Let’s put the member at the centre of our systems, our thinking, our regulation and our offerings. Put product last. If we do, this time it could actually stick.


Amara Haqqani is Chief Client Strategy Officer at Bennelong Funds Management. This article was first published in Investment Magazine and is reproduced with permission.


April 29, 2021

The simple client centric solution 'was' to be 'trustworthy and transparent' enough to have customers feel comfortable in growth then balanced super with a gradual move to conservative as they get close to retirement (unless they can clearly tolerate staying in balanced).
Accompanying this was the mantra of maximising super during working life and taking close to the minimum in retirement to make it last. This is what one of the biggest super funds in Qld had in place and served it's members very well. (sequencing of risk strategies only suit clients who intend to withdraw massive lump sums on a particular date, or fearful clients who've never developed trust in their managers so they sellout when the news is bad; ie, it only suits the lowest common denominator clients; and churning).
Then sequencing of risk, etc, came along, allowing managers to churn people out of appropriate long term investments for their 'very long term' 25 year investment/retirement timeframe, and put them into super low risk, super low return, short term investments, that don't suit their very long term retirement timeframes.
Putting clients into very low returns necessitates most of them using capital to co-fund their retirement.
(sequencing of risk strategies only suit clients who intend to withdraw massive lump sums on a particular date, or fearful clients who've never developed trust in their managers so they sellout when the news is bad; ie, it only suits the lowest common denominator clients; and churning).

April 23, 2021

Whilst I agree I'm not sure this has any practical application. What profession doesn't push product/service irrespective of the clients immediate needs? Simplicity is not an option as the regulations backing super will never allow it to be so. A non-silo approach is easier said than done and is extremely unlikely to prevail given the vested interests. Our current system is ranked as one of the best in the world already. If this changes then I see a much stronger case for mandated change.

Peter Vann
April 23, 2021

Thanks for your insightful perspectives regarding the retirement space. It is a clarion call to the industry to move forward by focusing on member outcomes, as you say “People first, product second”.

A few years ago a business colleague and I did a number of talks “5 retirement myths” which is summarised in a Firstlinks article here ( We concluded that the industry should focus on the sustainable pay cheque in retirement. I still believe that this puts discussions about finances in retirement in a language members can understand, ie simplicity and relevance at the member level.

April 22, 2021

Amara is a girl's name of Latin origin with the meaning of "everlasting". So.....Having you talking about mortality credits while you are everlasting is ironic. ["Mortality credits are created when people die sooner than expected and don't receive as many income payments as they would have if they had lived their full life expectancy. etc"]. Another observation: I think you would be unique in your appreciation of the intricacies involved yet you are leaving the field? You say "Retirement isn’t a product problem, it’s also not just an advice problem, nor is it just an investment problem and it’s definitely not just an engagement problem either. In my experience it’s all of them at the same time." "It’s time to do things differently in retirement policy" "And finally, the Australian public is not interested in consuming their hard-earned capital. After all, they’ve had generations before them demonstrate that they can preserve their capital and live off the income." "Let’s put the member at the centre of our systems, our thinking, our regulation and our offerings. Put product last. ............If we do, this time it could actually stick." Yes! That is exactly what "all us retirees and SMSF managers" want. Something stuck in place, permanent, certain, immutable. Something "we" could rely on and work with, a fixed constant. We are fed up with the continual change and threats of change and reinterpretation of rules and regulations, the apprehensive feeling that "we" may have overlooked something that will result in a penalty or worse! Why can't we be left alone with one permanent to "see us out". "Grandfathering" perhaps for "protection" !!! Grandfathering provisions enable a person to continue to have their circumstances assessed under the 'old rules', so they are not disadvantaged by the introduction of the 'new rules'. ... Income support recipients to whom the grandfathering provisions apply may come to light on an ongoing basis. WHY NOT ?? That seems to me to be fair , just and equitable !

Marc Lyell
April 22, 2021

Thank you for this article. I don’t think the industry is listening to these ideas yet. Their interpretation of member centric service does not match the suggested approaches described by the author.
This is hopefully an opportunity for innovation and real competition by the industry to introduce services which educate, support and meet the needs of members/ consumers in the pension phase of superannuation.

John Woolfield
April 22, 2021

I did not understand the term "mortality credits", but understood the concept. For those that do not: "The mortality credit is also known as the mortality yield. With a participating annuity, premiums paid by those who die earlier than expected contribute to gains of the overall pool and provide a higher yield or credit to survivors than could be achieved through individual investments outside of the pool. The mortality credit increases significantly with age and hedges longevity risk, often creating a return that would be impossible to match in the broader financial markets." I agree with much of this comment, but to take it down to a lower level, what you are asking for is for the finance and superannuation industries to behave in an ethical manner. And for the policy makers, read politicians, to behave in the best interests of the general populace. Certainly recent history has shown that this is not generally the case, but I am hopeful.


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