Product Capabilities – TTS Outcomes

The challenge for MySuper trustees is to lift the whole of fund projected retirement balance (yellow line) as high as possible within acceptable risk parameters.

The average TTS whole of fund benefit is summarised by the shaded area in the graph below (35+%).

 

graph21

The data is from the TTS Prototype and forms part of the Customised Report provided to trustees on a whole of fund average outcome basis.

In the absence of an agreed industry benchmark, the whole of fund 35+% benefit is homogenised across each age group until their retirement. The allocation of that 35+% depends upon fund characteristics.

At age 18, the current average balance of MySuper members is $4,212 and projected retirement balances average is currently $258,127. The TTS whole of fund estimated average outcome is lifted to $371,120 (44%).

At age 35, current balances average $143,179 and projected retirement  balances currently average $800,560. The TTS whole of fund average outcome is lifted to $1,009.350 (26%).

At age 55, balances average $230,368 and projected retirement balances currently average $428,708. The TTS whole of fund average outcome is lifted to $463,138 (8%) and sequencing risk is managed below current levels.

To explain the graph:

For 18 year olds, the application of TTS lifts their projected average retirement balance by 44%.

At age 35, TTS lifts the projected average retirement balance by 26%.

At age 55 TTS lifts the projected average retirement balance by 8%.

Collectively the outcome is 35+% higher, depending on the age profile of the fund in question.

Further sequencing risk (risk of loss as retirement approaches) is managed at or below current levels.

It is axiomatic that the member current balance and projected retirement balance will converge towards retirement age.

Also, that the cumulative benefits to be achieved by the application of TTS are greater for younger age groups who have longer for compounding of returns to work.  This element is partially offset by older members having higher average balances.