RETIREMENT PLANNING - Alexander Forbes  · PDF file retirement planning revolutionized....

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Transcript of RETIREMENT PLANNING - Alexander Forbes  · PDF file retirement planning revolutionized....

  • R E T I R E M E N T P L A N N I N G R E V O L U T I O N I Z E D

  • W H Y I S R E T I R E M E N T N O T W O R K I N G ?

  • W E ’ R E A L L T RY I N G TO M A N Y T E C H N I Q U E S TO H E L P

    T H E R E ’ S CO N STA N T T H I N K I N G TO M A K E I T B E T T E R

    W H I L E B U I L D I N G T H E CO M PA N I E S W E S E RV E

  • 4% 14%13%E Q U I T Y B O N D S P R O P E R T Y 1 5 Y E A R R E A L R E T U R N S

    G R E AT R E T U R N S - N O H U G E F U N D C R E D I T

  • A L E X A N D E R FO R B E S P E N S I O N I N D E X

    60% - 70%

    30%

    DEC - 01

    10

    40

    30

    60

    70

    80 90

    0

    20

    50

    JAN - 03 FEB - 04 AUG - 10MAY - 07 NOV - 13MAR - 05 SEPT - 11JUN - 08 DEC -14APR - 06 OCT - 12

    NRR target from 2001

    Average actual replacement ration

    Fund Target - salary at retirement

    JUL - 09 JAN - 16 FEB - 17 MAR - 18

    75%

  • O N L Y 6 % O F P E O P L E R E T I R E C O M F O R T A B L Y

  • HOW ON EARTH CAN THIS BE?

  • T R U S T E E S H A V E T R I E D

    T H E I R B E S T !

    S O W H Y I S I T N O T W O R K I N G ?

  • R E G U L A T O R Y C O N S I D E R A T I O N S

    F I R S T L Y ,

  • W I L L T H I S M A K E A D I F F E R E N C E ?

    B U T ,

  • M E M B E R S . . .DON’T M A K E I N V E ST M E N T C H O I C E S . . .DON’T R E A D T H E B E N E F I TS STAT E M E N TS . . .DON’T AT T E N D R OA D S H OWS

  • . . .DON’T TA K E R E S P O N S I B I L I TY . . .DON’T U N D E RSTA N D T H E C H A L L E N G E S

    T H E Y ’ V E S T O P P E D

    P A Y I N G A T T E N T I O N

  • W H E N T H E Y M I S S T H E M A R K E T R C O V E R Y

    W H Y T H E I R R E T U R N S L O O K S P O O R

  • 2% 15%

    8% 38% > 35 YEARS

    > 35 YEARS

    > 35 YEARS

    > 35 YEARS

    Proportion of active members with total service > 35 years at retirement

    Proportion of active members over 55 years with total service >35 years at retirement

    Proportion of active members with > 35 years service & expected replacements ratio >75%

    Proportion of active members over 55 years with expected replacement ratio >75%

    HOW MANY MEMBERS FIT THE “AVERAGE”?

    L I F E STAG E S A R E B A S E D O N “AV E RAG E ” M E M B E RS B A S E D O N AG E

  • D O T H E Y K N O W W H A T T H E Y A R E T A K I N G O N ?

    WILL IF THEY DRAW DOWN TOO MUCH?

    WHAT ADVICE ARE THEY GOING TO RELAY ON?

  • A N D I D E A S C A N W E B R I N G T O T H E T A B L E T O S O L V E T H E S E I S S U E S

    W H A T N E W T H I K I N G

  • 1 . B E E F F E CT I V E E V E N FO R T H O S E W H O A R E CO M P L E T E LY U N E N G AG E D

    2 . O F F E R R O B UST, S C A L A B L E A N D LOW CO ST I N V E ST M E N T ST RAT E G I E S

    1 . O F F E R P E RS O N A L I ZAT I O N B A S E D O N I N D I V I D UA L ACCO U N T

    2 . TA K E ACCO U N T O F C H A N G E S I N M A R K E T A N D P E RS O N A L

    C I R CU M STA N C E S

    3 . S U P P LY O N LY M E A N I N G F U L I N FO R M AT I O N A N D O F F E R

    ACT I O N A B L E C H O I C E S

    1 . S E T R E P L AC E M E N T I N CO M E A S T H E G OA L

    2 . S E T R I S KS R E L AT I V E TO T H E I N CO M E G OA L

    3 . A SS E T A L LO C AT I O N ST RAT E G Y TO M E E T I N CO M E R I S K

    4 . E F F I C I E N T US E O F A L L D E D I C AT E D A SS E TS

    5 . O F F E R S E A M L E SS T RA N S I T I O N A N D PAYO U T

    F L E X I B I L I TY AT R E I R E M E N T

  • D E F I N E D O U T C O M E S

    B R I N G S T H E C E RTA I N TY O F D E F I N E D B E N E F I TS A N D T H E P O RTA B I L I TY O F D E F I N E D CO N T R I B U T I O N TO G E T H E R

    D E F I N E D B E N E F I T D E F I N E D C O N T R I B U T I O N

    D E F I N E D O U TCO M E S : T H E N E XT E VO LU T I O N FO R R E T I R E M E N T F U N D S

  • PERSONALISEF O C U S O N A G O A L COMMUNICATE DIFFERENTLY

  • THE DATA HAS SHOWN THAT THIS INDIVIDUALISED APPROACH, SUPPORTED BY DATA, THE NUMBER OF PEOPLE WHO HAVE REACHED THEIR TARGET HAS DOUBLEDLIABILITY-RELATIVE ASSET

    ALLOCATION OPTIMISATION

    TOTAL WEALTH ASSET ALLOCATION

    INCORPORATION OF GUAR- ANTEED LIFE ANNUITIES

    DYNAMIC WITHDRAWAL STRATEGY

    TAX EFFICIENT DECISIONS

    LIFESTAGE VERSUS INDIVIDUAL APPROACH

    W H AT YO U R S O LU I O N G I V E S YO U W H AT ACT I V E G I V E S YO U

    N E W T E C H N O LO G Y A L R E A DY AVA I L A B L E FO R F U N D S TO I M P L E M E N T T H E S E I N D E FAU LT ST RAT E G I E S

    A D D I T I O N A L VA LU E P E R A N N U M A S % A SS E TS F R O M I N D I V I D UA L I S E D G OA LS - B A S E D ST RAT E G I E S*

    0.2%

    0.8%

    0.6%

    1.2%

    1.4%

    1.6%

    1.8%

    0.0%

    0.4%

    1.0%

  • FUTURE RETIREMENT

    CONTRIBUTIONS

    FUTURE INVESTMENT

    RETURNS

    CURRENT FUND

    CREDIT

    FUTURE RETIREMENT INCOME

    FUNDING POSITION PER MEMBER (%) = RETIREMENT ASSETS DIVIDED BY RETIREMENT LIABILITIES

    100% MEANS SUFFICIENT RETIREMENT ASSETS TO COVER RETIREMENT LIABILITY, ON TRACK TO MEET

    RETIREMENT INCOME TARGETS

  • P R I M A R Y O B J E C T I V E

    P R O T E C T F U N D I N G L E V E L

    I M P R O V E F U N D I N G L E V E L

    Majority allocation

    De-Risking Portfolios (protect against rising inflation, interest rates and falling falling equity markets)

    A Growth portfolio that gives the best chance of delivering higher investment returns to fund shortfall

    MEMBER X

    MEMBER Y

    MEMBER Z

    MEMBERS THAT ARE ON TRACK TO MEET RETIREMENT INCOME GOALS

    MEMBERS THAT ARE NOT ON TRACK TO REACH RETIREMENT GOALS

  • QUESTIONS