Australia. Two pathways for super funds to address longevity risk
Addressing longevity risk in the Retirement Income Covenant (RIC) is a tougher nut to crack for superannuation funds than its mandate for funds to mitigate investment and inflation risk to retirement savings.
Speaking to Money Management, Challenger’s general manager, institutional partnerships, Simon Brinsmead, said this was because it was the only risk that funds needed to balance that existed outside of the accumulation phase.
“Why this is significant is because you’ve got around about 700 people retiring every day now, so the floodgates truly have opened,” he said.
“It really is the toughest nut for these funds to crack because they need to build this and this is where it gets really interesting.”
With the RIC deadline of 1 July getting closer, Brinsmead said funds were realising their grand plans to address longevity risk would instead need to be implemented in baby steps.
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