ANZ HAS joined forces with Russell Investment Group to create a one-stop shop for superannuation, pension and banking advice for people “transitioning” to retirement.
The “next generation” retirement solution which aims to dramatically simplify the financial affairs of older Australians combines access to Russell’s multi-manager portfolios and ANZ’s fee-free “over 60s” banking services.
The new solution is an extension of Russell’s Russell Private Active Pension (RPAP), which was launched in 2007 in response to Australia’s new superannuation taxation arrangements, and in expectation of the dramatic shift in Australia’s ageing population work habits.
With statistics showing that more than 50 per cent of Australians are likely to be working part-time immediately prior to retirement, RPAP is the first retirement solution in Australia to provide flexibility for those approaching and in retirement by rolling a super contribution and pension account into one.
Through partnering with ANZ, Russell has integrated transactional banking facilities with RPAP, which will give RPAP users aged over 60 the flexibility to access their retirement savings at call via the ATM network while still maintaining their savings in a zero-tax superannuation environment.
Linda Elkins, managing director of Russell Superannuation, said RPAP and its extension to integrated banking facilities was part of Russell’s drive to deliver more innovative solutions to Australia’s changing semi-retired and retired population.
“There is a revolution going on in the Australian retirement landscape where older Australians, unlike prior generations, want to remain very active and engaged after the age of 60 or 65 – however many people seriously risk running out of savings if they fail to maximise their superannuation properly,” she said.
“By combining people’s super and pension, RPAP aims to keep people invested in the most tax-effective super environment for as long as possible.”
A key feature of the product is that it makes it easy for people still earning income to transfer assets between the accumulation and pension components, with no buy and sell costs on investments, no transaction costs and no time out of the market – a process that has been cumbersome, costly and overwhelmingly complex under previous super and pension products.
Recent research by the Australian Bureau of Statistics shows a strong trend towards Australians “transitioning” into retirement through a period of part-time work in the lead up to full retirement. Future retirees also expect to be far more reliant on their super savings as their main source of income in retirement, compared with current retirees who predominantly rely on the government pension or, in the case of many women, their partner’s income.
Ms Elkins said that superannuation funds had historically focused almost solely on the “accumulation” phase of people’s savings and wealth creation, but that the “decumulation” phase – ie where people are spending their savings through their retirement – could go on for 25 or more years, and actually contribute more investment income than the accumulation phase.
“An individual saves a constant percentage of pay from age 25 to 65 then decumulates for around 25 years. Under reasonable assumptions, every dollar decumulated consists of around 10 cents of savings, 30 cents of investment return earned during the accumulation phase, and a whopping 60 cents of investment return earned during the decumulation phase,” Ms Elkins said.
“Most people don’t realise your investment strategy post retirement is proportionately more important,” she said. “Russell aims to help people stay longer in the right investment environment, helping drive their savings further.”