An ageing and increasingly diverse community along with technological advances will reshape the superannuation sector in coming years and super funds will increasingly tailor their offerings to this new reality.
According to new research from superannuation industry business solutions provider Bravura, 10 trends will be at the forefront of drivers for industry development.
Whole of life super: At the heart of this trend lies an increasingly diverse membership.Today, the millennials, Gen X and the baby boomers all form part of the superannuation equation in near equal numbers.
To cater for those groups, funds of the future must be capable of seamlessly integrating broader offerings such as health care, banking and retirement products from third party providers.
Focus on post-retirement: A ‘grey revolution’ is underway, with people aged 65 expected to account for 21 per cent of the Australian population or 8.4 million people, by 2054. Those people are expected to love longer, with the number of people aged 85 and over anticipated to double by 2032.
That means the industry will have to develop retirement income type products that balance flexibility, longevity risk while retaining flexibility, Bravura says.
Health and aged care: This will be a new realm for super as the population ages. Funds will become actively involved in developing retirement income solutions that directly address their members’ health and aged care needs.
Hyper-personalisation: A recent survey of superannuation industry executives revealed that 83 per cent of superannuation trustees expect to personalise each member’s fund experience by 2025. To achieve this, funds are transitioning from a provider-driven model to models that allow the individual needs of members to be serviced.
Big Data and Analytics: As unprecedented amounts of data are drawn from fund members. In the UK, Mercer is at the cutting edge of this trend with its Mercer ‘Harmonise’ platform which provides an aggregated view of a member’s finances – including pension, savings accounts and investments.
Funds can use this information to tailor services to members.
Cognitive computing: Mimicking the way the human brain works, cognitive computing systems continually acquire knowledge by mining the data fed into them. They can envisage problems faced by members and solve them.
Digital advice: More and more complex digital advice iterations are evolving that can help members make increasingly complex choices without reference to advice provided by humans.
Regulation and compliance: New superannuation software systems will have to include functions that allow regulatory changes to be factored in and applied across the membership.
Automation and integration: Messy webs of legacy technology are thwarting efforts to remove manual intervention from fund management and administration. Funds will have to employ unified technology solutions to support secure, real-time connectivity across their operations.
Service orientated architecture: These software solutions that allow operating software using different computer languages to talk to each other.
Insourcing and outsourcing: New technology is giving funds far more ability to decide which functions they do in-house and which they outsource which in turn allows them to do only the things they do best themselves.
Software as a service: This allows third party businesses to host applications needed to manage and administer a super fund.This eliminates the expense of hardware acquisition, provisioning and maintenance, as well as software licensing, installation and support.
Bravura provides technology platforms used by a range of super funds including VicSuper, Mercer and Suncorp.