In the face of continuing market volatility, Mercer has urged super funds to tailor their investment strategies to focus on outcomes-based investing.
In a new report titled Top Ten Actions for Superannuation Providers in 2016, Mercer said now is the time for funds to shift the focus of their investment strategies.
“Funds need to focus on more outcome-based investing to ensure that their members achieve an adequate and sustainable level of income in retirement," Mercer's director of strategic research, Hendrie Koster, said.
“Investment strategies should be flexible and tailored to the specific needs of each member, including their balance, gender and objectives."
The report pointed out that the design of post-retirement solutions should be also be front of mind in 2016.
“Action from the industry to provide retirees with a flexible income solution that provides an adequate and sustainable income for their retired life also remains a top priority,” Mr Koster said.
However, while post-retirement has become a more significant priority, the market is immature and lacks a range of solutions, he added.
“We hope to see a strong increase in the number of tailor-made post-retirement offerings that have so far been limited in the absence of clear government guidance,” he said.
“Super providers need to be on the front foot, anticipating potential changes so they are well positioned to respond to any changes in legislation."
The report also found that in 2016, funds will need to prepare for potential changes to super tax, redefine objectives in a volatile world, tilt portfolios towards alpha, focus on governance, and evolve boards to consider gender and diversity.
Mercer said funds will need to focus on building a sustainable strategy, look at technology changing the face of consulting and reduce operational and implementation inefficiencies.