The Commonwealth Superannuation Corporation is planning to revamp its advice framework this financial year as the fund recently launched a Retirement Income Strategy to support its public service and defence force members.
The Retirement Income Covenant, which came into law in 2022, requires APRA-regulated funds to have a RIS for members.
CSC chief customer officer Adam Nettheim acknowledges the fund is “not as advanced” as some of its peers when it comes to working with external advisers and only has a small internal advice team, but it is looking bring the offering to a more sophisticated level.
“We’ve done a lot of analysis to determine who is an adviser on our CSC customer accounts, the kind of advice they’re providing…where we lose people to other product providers,” Nettheim tells Professional Planner.
“We’ve looked at the differences between their product and our product, and we’ve got a lot of data now that is helping us understand why advisers are writing advice out to others.”
The fund has only been active with focusing on the external advice market for two months.
“We have people in the field with external advisers – particularly those who are pretty supportive of our products – helping them understand more about us,” Nettheim says.
“It’s an area that we had a bit of a gap in, and we’re not as advanced as some of the other funds, but we’re certainly addressing it at the moment.”
The fund is also looking to technology to improve its own advice offering as Nettheim says it’s always been the fund’s intention to have a combination of human and digital touchpoints.
“We expect this financial year we’ll get to a decision around how we’re going to enable it, then start to execute,” he says.
The fund’s RIS broadly categorises CSC customers into 10 profiles based on their super balance, home ownership, and marital status.
These profiles were checked by an external actuarial group and published online, Nettheim says, so that members have access to them and can be nudged in the right direction when choosing their retirement income product.
While the modelling sounds like a complex task, CSC’s approach was fairly simple – the main data sources are member surveys and interviews, as well as the general public household income figures from the Australian Bureau of Statistics and the Household, Income and Labour Dynamics (HILDA) survey.
CSC wrote to 9200 members in the months leading up to the 1 July when its retirement income solutions were released. Within the first month of going live, there were 100 applications to its account-based pension CSCri – normally there are only 40 to 50 monthly applications.
The fund’s internal ‘super specialist’ team also have 150 appointments with members to for consultations on retirement product in the next month.
But Nettheim says there’s much more to do, because CSC never expected the current RIS to be the ultimate rulebook. In fact, the fund already factored in an “RIS 2.0” in the budget before the current iteration even came out.
“We’ll do a formal review at the 12-month period, but we’ll be doing informal reviews every three months from going live onwards,” he says.
“I expect one of these days, we’re going to be spending a fair bit of time with those people who haven’t come forward with any interest to find out why not.”
Nettheim says CSC won’t use retirement product signup as a measurement of success.
“I’ve been very clear and very much supported by the board and the CEO that we want people to take the product because it’s right for them, not because we’re trying to meet a sales target,” he says.
The real indications of success would be an improvement in understanding members’ retirement needs, positive feedback from members and the reduction of “cognitive load”, which Nettheim describes as a mental burden that retirees have when they grapple with the change of lifestyle in retirement (of which finances is only a small part).
“Particularly for some of our customers, if you look at military people, or the Australian Federal Police, or a lot of the public services [employees], they are really proud of the work that they’ve done, and then they suddenly lose their identity [in retirement],” he says.
“So how do people stay healthy, happy, connected to friends and family? Because having decent money in retirement is obviously important, but being happy in retirement is probably just as important.
“I do think one day, super funds will be compelled to help [with this cognitive load], because ultimately we’ve got all the funds under management. I think the government will say it’s up to you. You’ve got all the money. I’m trying to make sure that we’re an early adopter, if you like, into this space.”
