With a mature system of defined contribution pension plans, Australia offers some lessons for how Canada’s industry may evolve.
At Benefits Canada’s upcoming Benefits and Pension Summit, Kim Hughes, head of product and services at QSuper, one of Australia’s largest superannuation funds, will share the plan’s experience in assisting members with financial well-being and retirement readiness.
A global institutional investor, the fund has 565,000 members, assets in nearly 40 countries and more than 72 billion Australian dollars in funds under management.
Hughes recently spoke with Benefits Canada to share insight into Australia’s superannuation system and offer some tidbits about her upcoming session at the 2018 Benefits and Pension Summit on April 17 at the Ritz-Carlton Hotel in Toronto.
1. How did you come to join QSuper, and what does your job entail?
I’ve always been in superannuations. I started accidentally but meandered around to different roles within the industry. I’ve always been passionate about the financial services industry. I moved out of super for a little while into funds management with Queensland Investment Corp., but I felt one step removed from the member. So my passion is to help members and to help employees achieve their retirement income goals.
I wanted to move back into super and, because of my product knowledge, I’ve generally been in the product space. At the moment, I’m the acting chief of member support and advice, which means I cover the contact centre, the insurance business — we’ve established [an in-house] company, QInsure, so I run the QInsure business — and I also run the advice business, so it’s quite a large division at the moment.
2. How does Australia’s system of superannuation plans work?
The government has a three-pillar approach, where you’ve got the age pension as a backup for anybody who has insufficient funds at retirement, and we’ve got a compulsory superannuation environment, where we’ve been required to [make compulsory contributions] from the employer and employee . . . and members are encouraged through tax incentives to contribute on a voluntary basis into the superannuation as well.
Superannuation funds in Australia can also include ancillary benefits, such as the provision of an insured benefit in the event of [a member’s] death or total and permanent disability or income protection if you’re temporarily disabled due to illness or injury. And the idea there is that, if you’re protecting somebody’s retirement income, if they’re off work for a period of time, you can insure them and you can continue making those superannuation contributions to enable them to get back to work.
So the whole focus is about getting people to work, making contributions and saving for their own retirement.
3. QSuper has integrated technology to help improve plan members’ financial well-being. Is the use of technology in pensions and investments a trend in Australia?
It’s definitely a trend. We’re leading in many respects and behind in others, but there’s definitely a push towards technology. . . . Where you’ve got low-value transactions being performed by humans at high cost, there are certainly efficiencies to be achieved by automating and using technology to systematize some of those transactions, as long as there’s no detrimental impact to the member experience. So that’s one way which technology is used. And the other is, how do we enhance the member’s financial well-being? How can we use technology and the tools available to fit them on that journey?
[There’s] the core purpose, or the sole purpose, of superannuation being retirement income. The Australian system has moved beyond that to financial well-being, so it’s nearly impossible to say that we can only focus on your superannuation if in retirement you’ve got $500,000 worth of debt or you have not set up your estate in a way that’s appropriate. Even for the younger members, just managing their day-to-day expenses is important so that they can start saving . . .. The whole system has moved away from just being focused on you must save for retirement in one superfund to let’s broaden this to consider the holistic financial well-being of the member. In solutions that we’re offering, it’s helping to manage their day-to-day spending. So that’s the other way in which we’re using technology to leverage the member’s actions to help them achieve their financial well-being.
Find out more about QSuper and its technological efforts at the 2018 Benefits and Pension Summit.
Register for the event here.