QSuper is applying defined-benefit thinking to its accumulation fund to tailor investments which deliver a high degree of certainty around financial outcomes.
QSuper chief strategy officer Michael Pennisi said "we're tailoring outcomes which get back to the real purpose of superannuation which is to provide certainty in retirement".
For the 540,000 members of the fund, the changes will begin early 2013, and the first group will be 50 plus year olds in the default option for defined contributions (QSuper also has defined-benefit members).
The fund had withdrawn from industry peer surveys in June this year as the first stage of moving away from the peer-hugging thinking which dominated defined-contribution funds, Pennisi told delegates at the 12th Annual Wraps, Platforms and Masterfunds conference last week.
"The GFC [global financial crisis] was not the only financial shock in recent years," Pennisi said, in criticising the fact that many funds' default options have remained static.
"The SG [Superannuation Guarantee] has gone from 3 to 9 to 12 per cent, but defaults are still the same."
Having monitored more than 200,000 phone calls from members per year, QSuper distilled the three main concerns to current amount, future need, and final adequacy.
"You can hear the trepidation in members' voices when they ask these three questions," he said.
"Why are we here? What are we here for - maximum benefits or some certainty? The most important part is understanding your objective. The investment solution is the easiest part."
In applying defined-benefit thinking to a "defined-contribution type world, we may not hit the bull's eye every time, but we're near it," Pennisi said.
Money had to be managed dynamically, and QSuper's advice arm, QInvest, was part of the strategy to communicate with and educate members.
"We are going to look different to other funds. We will be targeted retirement income, with mass personalisation in accumulation and decumulation phases," he said.
The asset-liability management principle of DB funds would be used, Pennisi said.
"This is definitely not set-and-forget," he said.
The first group to be targeted would be the 50 plus, and then this would be split into account balance cohorts because of the impact of Centrelink eligibility on investments.
Pennisi emphasised that the fund would be moving quickly on these changes.
"We've got to get moving. What the industry is delivering is inconsistent with what the objectives have been," he said.
The changes would become QSuper's MySuper option early next year, with the proposals going to the fund's board next month. Different governance would be required, and the fund was setting up internal asset-liabilities management committees.
"Let's just get moving on this. I'm not spending the next five years building a Rolls-Royce that never gets moving," Pennisi said.
