'Nest eggs' better feathered thanks to QUT superannuation researcher
A scholarly body of research on superannuation that has informed policy and regulation nationally and internationally has gained QUT School of Economics and Finance Associate Professor Anup Basu the 2017 QUT Research Impact Award.
His research was recently accorded the highest ‘4 Star’ (outstanding impacts in terms of reach and significance) classification by an assessment panel comprising domestic and international reviewers with experience in impact panel or UK’s Research Excellence Framework.
The ‘nest eggs’ of millions of people globally have been influenced by Professor Basu’s research which has been called upon by many institutions including Australia’s Productivity Commission, the US Government Accountability Office, the US Securities and Exchange Commission, and multilateral organisations including the OECD, IMF and World Bank.
Australia’s superannuation sector has also benefitted from Professor Basu’s research findings,including peak industry bodies such as the Association of Superannuation Funds in Australia (ASFA), superannuation funds like QSuper and investment companies including QIC.
Professor Basu said there is substantial research evidence that suggested most superannuation or retirement plan members passively accepted the default investment option nominated by the trustees, despite being offered the opportunity to choose their investment strategy.
“Therefore, it is important that the default investment options are appropriately designed to meet the retirement goals of these employees,” Professor Basu said.
“Our research on default investment arrangements has been influential in driving legislative and regulatory changes, the development of new investment products and policy recommendations that will affect the retirement savings of tens of millions of employees in Australia and beyond.
“This, in turn, will affect government spending on provision of age pensions and other social security benefits.”
Professor Basu’s research has directly informed the Cooper Review of Australian Superannuation System and subsequent amendment of Superannuation Guarantee Act that has provided for inclusion of lifecycle products as default “MySuper” options by superannuation funds.
“Since the change, there has been enormous growth in lifecycle products as default investment offerings by superannuation funds,” he said.
“Almost 25 per cent of MySuper options are lifecycle products which account for nearly one-third of the $474 billion superannuation assets invested in MySuper.
“For millions of Australians enrolled in these lifecycle MySuper options, there will be significant reduction in risk of large negative shocks near retirement which will facilitate planning for their retirement with more certainty.”
In the US, Professor Basu’s research assisted government enquiries of Target Date Funds (TDFs) and influenced the marketing rules of these funds particularly in relation to disclosure information to consumers.
“TDFs are the fastest growing segment in the retirement investments market accounting for US$763 billion in assets as of 2015, according to investment research firm Morningstar,” he said.
“The regulatory change and further recommendations from our research are helping American employees make more informed decisions when choosing such funds for their retirement plan contributions.
“Our research has contributed to the OECD’s recommendation to its 35 member nations to design appropriate default investment arrangements for a vast majority of the working population who do not have the knowledge and expertise to choose an investment strategy for their retirement nest egg.”
Associate Professor Anup Basu
QUT Business School
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