Best of the Best 2023: Retirement Innovator

The winner of the Retirement Innovator award, Australian Retirement Trust, has developed one of the best retirement products in Australia, sparking interest among competitor super funds in following its lead.

"Superannuation is about members building enough savings to enjoy their best retirement, yet we know many retirees are worrying about their savings running out, which is why we created the Australian Retirement Trust Lifetime Pension," says Bernard Reilly, chief executive officer of the super fund.

Australia's super system crossed the Rubicon in 2022 when the share of superannuation savings owned by retirees and people aged over 65 moved above the 40% barrier. The long-awaited transition of super from a system centred on accumulation savings to one focused on serving the needs of retirees had finally happened.

The pace of this transition will only get faster. Rainmaker, publisher of Money magazine, expects that within the next 20 years two-thirds of all superannuation savings will likely be owned by retirees. This will force funds to modernise and adapt to their needs. The quicker they do this the better.

They will still stay focused on achieving the best investments returns they can, but they will have to be just as relentlessly focused on how to give their retiree fund members access to their savings in ways that are flexible and more creative than they are now.

That is, they will have to retilt the balance between investment returns, fees and generating long-run income so retirees can more confidently mix and match their superannuation savings with their age pension and social security entitlements, giving them confidence to enjoy their retirement without fearing they might run out of money.

For super funds to quickly transition like this won't be easy, however. This is because a typical person who retires at about 65 needs their superannuation to last on average another 30 years.

These retired fund members will also want these savings to not limit access to their fair share of age pension benefits, even if it's just the Commonwealth Seniors Health Card.

This emerging challenge has given the most innovative funds a tremendous opportunity to reimagine retirement products, services and the types of accounts they can offer to their retired members. In 2021, responding to this, QSuper, which merged with Sunsuper in 2022 to become Australian Retirement Trust, launched the QSuper Lifetime Pension account. It was a new type of retirement account widely recognised as one of Australia's most innovative.

It was purpose-built for retirees to reassure them that their money will last as long as they do, that it will protect their spouses when they are no longer around and that - should they not survive as long as they hoped - their family and their estate would keep what's left in their account, not the fund. This last feature is the game changer because fear they would lose this money is why so few retirees invest in annuities.

Holders of the QSuper Lifetime Pension, which is designed to work with QSuper's account-based pension, may also still be eligible for generous concessions around the age pension income and assets tests, allowing them to maximise their age pension and other social security entitlements.

With features like this it's easy to see why QSuper Lifetime Pension has won a raft of awards, not just in Australia but globally, such as the one from the 2021 Pensions and Investments WorldPensionSummit.

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