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$9 million project will shine a light on Super funds, spending and more


Do baby boomers really burn through their super and fall back on their pensions? What is the future of Australia’s superannuation fund worth $1.6 trillion and still swelling?

Researchers from CSIRO and Monash University in Melbourne are joining hands to examine what may be mere urban myths, or maybe something fraught with real consequences for the nation and its fiscal health, not to mention the lives of seniors.

“We’re looking to understand what retirees need, how long their super lasts and what investment options and financial products might best suit them throughout their retirement so we can figure out how their super could work smarter,” CSIRO research leader Alan Dormer said.

Do we really know anything?

At the heart of the $9 million is the acknowledgement that we know right know, perhaps, could be written on the back of a stamp. We have little data on how super money is spent, and still fewer insights into the minds of the seniors.

“For example, what levels of confidence and security does superannuation provide to retirees, and how does it affect their spending behaviour throughout their retirement?” asks Dormer. Similarly, we need to understand how people select their investing options during working life, and how these impact the eventual super fund and, in turn, spending habits.

“The super system is maturing and changing, and we need to start using an evidence-based approach to understand what we need to do now and into the future to re-engineer super to best suit members and inform decision making at an industry and government level,” Dormer said.

Setting the agenda for researchers

The Melbourne-based researchers will use big data analytics, social science, risk and economic modelling to answer questions such as the above. Specifically, their research over the next year will examine:

•    Retirees’ lifecycle expenditure patterns

•    Managing liquidity risk for superannuation investment

•    New and innovative superannuation products

•    Behaviour economics in superannuation

The CSIRO-Monash Superannuation Research Cluster, launched last September, will bring together researchers from CSIRO, Monash and Griffith Universities, the University of Western Australia and the University of Warwick in the UK for this project.

Deborah Ralston, the research leader at the cluster, said the centre has received “very positive engagement” from the Super industry. Several industry bodies and funds such as the Association of Superannuation Funds of Australia, Australian Institute of Superannuation Trustees, Financial Services Council and Challenger, BT and CBUS have come on board, she said.

Industry is an eager participant

Industry groups also have expressed great enthusiasm for the research project. So, David Cox of Challenger Financial Services is looking forward to “CSIRO’s big data capability” shifting superannuation research from “assumptions-based modelling to empirical analysis of relevant population cohorts so researchers, the industry and policy makers can gain new insight into what the superannuation system is actually delivering to retirees.”

To Michael O’Neill, chief executive of the over-50s group National Seniors, expects the research will, above all, debunk some of the super spending myths associated with older Australians.

“We expect claims that baby boomers are spending their super on living the high life, and then falling onto the pension, will prove unfounded,” O’Neill said.