# Methodology

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This MySuper Outcomes Tool uses information reported by MySuper Funds and published by APRA in the:

__Annual MySuper Statistics__June 2019 – reissued 18 December 2019, (MySuper Annual)__Quarterly MySuper Statistics__September 2019 – reissued 2 December 2019 (MySuper Quarterly)__Heat Map Data File__– as at 10 December 2019, (HeatMap data)

It also utilises the __RBA Inflation Calculator__, average annual inflation rate of 1.6% between June 2014 and June 2019, as CPI.

- The
**Percentage of Members in each Cohort,**is contained in MySuper Annual – Table 7 columns W to AD - The
**Base Fund Retirement****Balance Outcome,**for each Cohort, is the excel standard Future Value calculation rounded to the near thousand, on a fortnightly basis (26 per year), at the end of the fortnightly period.- The
**Rate**used, has been matched to the fund and its life-cycle stage.- For
**Return Target**, the MySuper Quarterly SRF 700 item 1 Return target (annualised target net return above CPI over ten years), from table 1A (single strategy) and 1B (life-cycle options) matched to each fund and lifecycle by age cohort, is used. Where multiple lifecycle options occur within an age cohort, a simple average is applied. - Similarly for
**Heat Map NIR**, the HeatMap data –**NIR adjusted for CPI and Total Admin & Operating Expenses**, is applied to (single strategy) and (life-cycle options) matched to each fund and lifecycle by age cohort.**NIR adjusted for CPI and Total Admin & Operating Expenses**, is the HeatMap data Column J (5_year_net_investment_return_nir_p_a) figure less inflation (1.6%) less Total Administration and Operating Expenses, from MySuper Annual (column T).

- The period used for each age cohort up to retirement at age 67, is 47 years (<25 yrs), 37 years (25-34), 27 years (35-44), 19.5 years (45-49), 14.5 years (50-55), 9.5 years (55-59), 4.5 years (60-64) and 0 (65-69 years). Age cohorts are based on the APRA data age brackets.
- The payment (or contributions amount) is the average
**Adjusted Contributions**amount per fund.**Adjusted Contributions are**:**Average contributions per average account**, being employer and member contributions (SRF 330.2 item 1.1 and 1.2) from APRA Annual Table 1 , divided MySuper Annual – Table 7 total number of accounts, less**Contributions tax**at 15%, less**Insurance Premiums,**being MySuper Annual Table 1 total Outward Insurance Flows SRF 330.2 item 8.2, divided MySuper Annual – Table 7 total number of accounts.

- The present value (or current balance) is the average account balance for each age cohort, being MySuper Annual – Table 7, total balances divided by total accounts (SRF 610.2 item 5.5/item 5.4).

- For

- The

**Outcome Overlay on Base Fund,**replaces the rate (see 2.a above), of the base fund with that of the overlay fund, calculated on the same terms.

**Retirement****Annual Outcome**equals Base Fund or Overlay Fund Retirement Balance Outcome multiplied by 0.0566 – rounded to nearest $100. This is a reasonable conversion given Regulators have previously used this conversion factor.**Sequencing Risk for the Base Fund and Overlay Fund**, is the MySuper Quarterly tables 1a and 1b (SRF 700 item 3), level of investment risk (estimated number of negative net investment returns over a 20 year period), as a percentage matched to each fund and lifecycle by age cohort.**Well-Designed default guideline,**replaces the rate Return Target and Heatmap NIR rates and sequencing risk with a**guideline**based on the Heat Map. The**guideline**rate is the Return Target and Heatmap NIR rates and sequencing risk divided by the HeatMap data column I (strategic_growth_asset_allocation), multiplied by 95 (<25 years), 90 (25-34 years), 85 (35-45 years), 80 (45-50 years), 75 (50-55 years), 70 (55-60 years), 65 (60-65 years) and 60 (65-70 years).- See also Figure 6, being 5-year net investment return peer comparison by average growth allocation p.a. (as at 30 June 2019) in the
__MySuper Product Heatmap – data insights__. - The guideline does not yet take into account Productivity Commissions finding on the
**good prospects for further personalisation of life-cycle products**, or the resulting better matching to member needs. That requires additional data.

- See also Figure 6, being 5-year net investment return peer comparison by average growth allocation p.a. (as at 30 June 2019) in the

**Engagement Outcome Ratio**, is the inverse from Heat Map Data File, column G “proportion_of_total_assets_in_mysuper”, per fund. That is it displays the proportion of total assets not in MySuper (e.g. where a member has selected an investment option for those funds).

- In this MySuper Outcomes Tool:
- The Speedometer is the total Outcome across all age cohorts in dollar and percentage terms,
- Outcomes are in today’s dollars,
- Where multiple fund lifecycle options occur within an age cohort, a simple average is used,
- Where data is missing averages are calculated excluding that element and Zero,#/DIV, NA or Value is indicated in the Tool,
- No responsibility is accepted for errors or for updating.