02 March 2016

Australia , Melbourne

Mercer is urging superannuation funds to become more focused  on outcome based investment strategies and be more proactive in reviewing their post-retirement offerings in 2016.

Mercer’s paper – Top Ten Actions for Superannuation Providers in 2016 – warns super funds that 2015 saw the  turning point for investors following three years of strong market returns and 2016 will continue to see volatility; now is the time to shift the dial in  terms of investment strategies having a stronger focus on individual members with tailored asset allocations based on demographics.

Mercer’s director of strategic research, Hendrie Koster, said, “Many super investment strategies still assume all members have the same  investment objectives and therefore invest in the same way regardless of the members’ specific needs; this approach will have to change in 2016.”

“Investment strategies should be flexible and tailored to  the specific needs of each member, including their balance, gender and  objectives. Funds need to focus on more  outcome based investing to ensure that their members achieve an adequate and  sustainable level of income in retirement,” he said.

The design and positioning of post-retirement solutions should be given particular attention by super funds in 2016 according to Mercer.  

“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,” said Mr Koster.

“Post-retirement has certainly moved up the priority list for the industry as a whole, but the market is still immature and the range of  solutions is thin. 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.

“Super providers need to be on the front foot, anticipating  potential changes so they are well positioned to respond to any changes in legislation.

“Unfortunately market volatility is expected to continue  throughout 2016, we’ve already experienced a particularly rocky start to year. Despite many sources of uncertainty in the economic and political environment, we see potential for interesting  investment opportunities; there are few excuses for complacency. Low yields and heightened volatility make  risk management more important than ever,” Mr Koster said.

Mercer’s Top 10 themes every super provider  needs to know over the coming year:

  1. Focus on outcome based investing
  2. Prepare for potential changes to super tax
  3. Post-retirement continues to be a focus
  4. Re-define objectives in a volatile world
  5. A time to tilt portfolios to alpha
  6. Reflect on governance and beliefs
  7. Board evolution: Structure and diversity
  8. Build a sustainable strategy for the future
  9. Technology changing the face of consulting
  10. Reduce operational and implementation inefficiencies



About Mercer
Mercer is a global consulting leader in talent, health, retirement and investments. Mercer helps clients around the world advance the health, wealth and performance of their most vital asset—their people. Mercer’s more than 20,000 employees are based in 43 countries and the firm operates in over 140 countries. Mercer is a wholly owned subsidiary of Marsh & McLennan Companies (NYSE: MMC), a global professional services firm offering clients advice and solutions in the areas of risk, strategy and people. With 57,000 employees worldwide and annual revenue exceeding $13 billion, Marsh & McLennan Companies is also the parent company of Marsh, a leader in insurance broking and risk management; Guy Carpenter, a leader in providing risk and reinsurance intermediary services; and Oliver Wyman, a leader in management consulting. For more information, visit Follow Mercer on Twitter @MercerAu