Key Points:
Trustees who use the same default investment strategy
for post-retirement as for pre-retirement accumulation products
could be sitting on a ticking time bomb.
The "sole purpose test" in the Superannuation Industry
(Supervision) Act (SIS Act) requires
superannuation trustees to maintain their fund solely to provide
retirement and death benefits (and some ancillary benefits) to
members.
However, while most trustees have good processes for investing
members' benefits during the pre-retirement (accumulation)
phase, they have paid less attention to the post-retirement
phase.
One concern is that most trustees use the same default
investment strategy for post-retirement as for accumulation
products. Rice Warner has found that most trustees have not
even considered designing an appropriate default
fund for retirees.
