Pension Net Benefit model

AustralianSuper has commissioned SuperRatings to undertake research and modelling to be used in select AustralianSuper advertisements and communications.

SuperRatings is a ratings, research and consultancy company that specialises in analysing superannuation funds, their investment returns, their fees and the relative benefits they offer to their members.

SuperRatings’ proprietary Pension Net Benefit model focuses on the drawdown phase of a member in retirement. The model seeks to replicate the decumulation of a member’s pension benefit over a range of time periods as at 31 December 2021. The outcome presented assumes a starting account balance of $300,000 and a drawdown rate of 6% per annum.

Sample Set 

The sample set used in the modelling is summarised as follows;

Sample set 1 Year 3 Year 5 Year 7 Year 10 Year
Master Trust 40 37 28 22 14
NFP 48 47 47 45 40
Total 88 84 75 67 54

Information about the Pension Net Benefit Model

  • The model uses the ‘main Balanced option’ being the fund’s largest Pension Balanced option where 60% to 76% of the fund’s assets are invested in growth investments. This is generally the fund’s default option. Where a fund does not have a Balanced option, the option closest to SuperRatings benchmark range of 60% to 76% growth investments is used. This is done for so for each pension product provider in the sample set.
  • The model uses return and fee data that is submitted by funds to SuperRatings, made publicly available by funds or contained within formal fund disclosures as at 31 December each year.
  • Using the starting account balance, the drawdowns, earnings and fees are calculated using 31 December data each year to derive the closing account balance at the end of each year.
  • The closing account balance from the previous year is then used to calculate drawdowns, earnings and fees on the account in the following years with the process being repeated for each year of the comparison.
  • The net benefit for each product refers to the cumulative earnings less fees for the relevant comparison period.
  • The model assumes no additional withdrawals over the relevant comparison period.
  • The model is updated with 30 June and December 31 figures.
Other Assumptions used for the Pension Net Benefit Model

Opening account balance

Each calculation timeframe assumes an opening account balance.

Investment Returns

Performance (Net Benefit) modelling is based on actual reported returns over the stated period.

When are investment returns credited to members’ accounts?

Investment returns are credited annually, however, the total investment return is adjusted to take into account pension payments and fee deductions.

Pension drawdowns

Pension drawdowns are calculated utilising a drawdown level of 6% per annum and are assumed to occur monthly.

When are fees assumed to be deducted?

Annually.

Fees

All fee information is taken from the sample funds’ Product Disclosure Statements or other formal disclosures at the end of each year in the calculation. Establishment fees, buy/sell spreads, entry fees, additional adviser fees or any other fees charged are excluded from this model.

Modelling was performed on 25 February 2022 using data as at 31 December 2021

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