Effective from 1 July 2015, AvSuper is introducing a new default investment arrangement for new retirees joining the income stream division of the Fund. The new arrangements replicate the investment choice advice most commonly given to AvSuper retirees when establishing an income stream.
New Income Stream defaults
Under the new arrangements the default investment option for new income stream members who do not make investment choice, will be to allocate their retirement savings to a blend of the new Balanced Growth investment option (77%) and the Cash investment option (23%), with regular income stream payments to be drawn from the Cash investment option. This will provide AvSuper retirees with an overall asset allocation of approximately 50:50 exposure to growth and defensive asset classes, which the Trustee considers to be an appropriate and prudent default arrangement for retired members who do not exercise their own investment choice, or do not seek personal financial advice when establishing an income stream in retirement.
The Trustee recognises that most AvSuper retirees face issues that those still working do not face, including longevity risk, uncertain financial requirements and less tolerance of investment market volatility affecting their retirement savings. Ensuring that at least 20% of retirement savings into the Cash investment option to fund regular income stream payments also ensures maximum protection for AvSuper members against the risk of being required to capitalise losses in other asset classes if required to make withdrawals during investment downturns. Members can vary these arrangements by exercising member investment choice to better suit their needs if required at any time.
These changes only affect new members who join the AvSuper income stream division on or after 1 July 2015 who do not exercise member investment choice, or don’t seek financial advice when establishing their income stream account.
Want to know more?
Please contact us with your questions or make an appointment with an AvSuper Member Advice Consultant if you would like to discuss your investment choices and/or retirement plans.