Research Roundup: 13 December 2022
Welcome to our final edition of Research Roundup for 2022, a milestone year in superannuation policy that saw compulsory super celebrate its 30th birthday, coverage extended to low-income workers with the removal of the $450 threshold and a very busy legislative and regulatory agenda.
In this edition we bring you a selection of investment insights from our industry partners, updates to a number of global pension system benchmarking analyses, an eye on the gender retirement savings gap and a special focus on decision-making, whether related to ageing, saving, retiring or providing resources to enhance financial literacy.
We hope you find this Summer reading interesting and informative and we’ll be back with more next year.
Asset Management and Investment Insights
Digital Digest: Volatility and the Digital Transformation
Released just ahead of recent cryptocurrency exchange collapses, this third edition of State Street’s Digital Digest focuses on crypto-market volatility, regulatory trends, governance in decentralized finance networks, the potential for distributing digitally tokenized assets through ETFs, and the growth of stablecoins.
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A perspective on embedding ESG considerations into Private Equity’s value creation approach
IFM’s recent insight paper discusses aligning the ‘the heart, the head and the feet’ to embed ESG considerations into private equity value creation approach. Their model frames the ‘heart’ as being about aligning a company’s ‘noble purpose’ and culture with value creation to accelerate impact. The ‘head’ is about incorporating ESG into investment strategy, the ownership of which must sit with both the investment team and portfolio company boards, and the ‘feet’ are about tangible actions, continuous improvement and progress of value creation plans that incorporate ESG objectives.
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Responsible investment and stewardship
Responsible investment manager Federated Hermes joins AIST’s industry partners this quarter and brings a suite of research white papers and insights from their industry experts.
- The EOS Stewardship team brings us their 2021 Stewardship Report, relevant to asset managers and owners with duties under the UK Stewardship Code.
Ageing and decision-making
Financial decision making for and in old age
This research paper from CEPAR examines the effects of mild cognitive decline in aging on decisions related to personal retirement finances, primarily superannuation.
Many of the considerations raised were discussed at AIST’s very well received December webinar on cognitive decline and the retirement system, a recording of which can be found on AIST’s website.
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Understanding ‘Early Exiters’, the case for a healthy ageing workforce strategy
This paper from Demos and The Physiological Society investigates the factors that lead to the choice to retire from the workforce before reaching state pension eligibility age. While focused on the UK, its findings and recommendations have broader application and this research contributes to the pool of understanding about the drivers of early retirement.
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Young People’s Financial Strategies: Insights from the Australian Youth Barometer
At the other end of the age spectrum, this paper from the Monash Centre for Youth Policy and Education Practice explores the financial experiences of young people and how these are deeply interconnected with other aspects of their lives.
The findings of this report have implications for young people across their housing situation, family connections, work, wellbeing and other broader contextual factors, and will be a valuable resource for funds seeking to develop financial literacy resources targeted toward their younger membership.
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Enhancing online disclosure effectiveness
Also relevant to member communications, and with transparency a hot topic for policy-makers and the super industry during the year, this timely report from the OECD provides a systematic review of the features and challenges in designing effective online disclosures.
Importantly, the report stresses that information overload and behavioural biases can cause consumers to ignore disclosures entirely or otherwise impede the effective use of disclosed information in their decision making. Policy makers are encouraged to consider the context and format in which consumers receive disclosures in order to limit unintended consequences and meet their policy objectives.
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APRA launches new statistical publication
Providing valuable insights to industry and researchers, APRA has launched the first in a series of new publications that leverage new reporting standards. The first is a new quarterly publication that provides data on superannuation products and investment options, member demographics and investments. Demographic information such as gender, age and account balance information was previously only provided in the annual dataset.
AIST has observed that membership profiles for specific product types, currently limited to MySuper vs overall membership, could be expanded to provide new insights into retirement products in future editions. This granularly could then be used by funds to inform benchmarking and cohort analysis for retirement income strategies.
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Eye on pensions systems
OECD Pensions Outlook 2022
Every two years, the OECD releases its Pensions Outlook, providing an analysis of the latest developments in pension policies in OECD countries. The 2022 edition focuses on describing best practices for developing mortality tables and providing policy guidance on how to design, implement and continue the operation of non-guaranteed lifetime retirement income arrangements.
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Mercer CFA Institute Global Pension Index
The annual Mercer CFA Institute Global Pension Index launched in October, with Australia ranked number 6 of 44 retirement income systems around the world, benchmarked on adequacy, sustainability and integrity. Nordic countries continue to top the rankings, largely for their egalitarian approaches to social equity and primary care giver support.
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The gender lens
Gender Wealth Equity Index
European countries also performed strongly in WTW’s new flagship research report, developed in collaboration with the World Economic Forum. In examining the drivers of wealth inequality at the point of retirement, the report highlights the impact of the lack of women in senior leadership roles as a major contributing factor to the accumulation of retirement savings.
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Unleashing Australia’s Economic Potential
From global to local, Deloitte Access Economics have partnered with Australians Investing in Women to produce an analysis of the root causes of economic gender gaps with a focus on the Australian context. Gender norms and biases continue to present significant barriers despite years of investment into gender equity. Equal pay initiatives will only have incremental impacts if participation at all levels of employment, attitudes around gender stereotypes and the way that unpaid domestic labour is allocated and valued are not addressed.
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