Russell joins forces with ANZ to launch 'next generation' retirement solution for Australia's 'active' retirees
"Russell Private Active Pension becomes the first retirement solution to seamlessly blend a super savings option, pension and transactional banking facility. The solution caters to the millions of Australians who expect to 'transition' to retirement via part-time work".
Linda Elkins
Managing Director,
Russell Superannuation
SYDNEY, 11 June 2008 - Global investment and superannuation specialist Russell Investment Group has joined forces with leading bank ANZ to create a ‘next generation’ retirement solution that will dramatically simplify the financial affairs of older Australians. The new solution combines access to Russell’s world-leading multi-manager portfolios with ANZ's award-winning fee-free* 'over 60s' banking services to create a one-stop shop superannuation, pension and banking experience for people ‘transitioning’ to retirement.
The new solution is an extension of Russell’s innovative Russell Private Active Pension (RPAP), which was launched in 2007 in direct response to Australia’s new superannuation taxation arrangements, and in expectation of a dramatic shift in Australia's ageing population work habits.
With statistics showing 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. RPAP has since been awarded the highest possible '5 apples' rating by independent research house Chant West for its fees and features.
Through partnering with ANZ, Russell has now integrated transactional banking facilities with RPAP, which will give RPAP users over 60 the flexibility to seamlessly 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.
The decumulation trap: the risk of dying broke
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 to current retirees who predominantly rely on the Government pension or, in the case of many women, their partner's income.
Ms Elkins said superannuation funds had focused almost solely on the 'accumulation' phase of people’s savings and wealth creation, but that the 'decumulation' phase – i.e. where people are spending their savings through their retirement – could go on for 25 or more years, and actually contributes 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. Most people don't realise your investment strategy post retirement is proportionately more important," Ms Elkins said. "Russell aims to help people stay longer in the right investment environment, helping drive their savings further."
Ms Elkins said super must become better integrated with broader 'wealth management' planning and embraced by both individuals and their advisers. While Australia already has a rapidly ageing population, today Australians are also starting work later, living longer, and wanting to retire – or part-retire – earlier.
"This means we have less time to save for retirement and longer to spend it!" Ms Elkins said. "We believe that the integrated RPAP offering is a dramatic step towards reinforcing the concept that Russell can be an investor's partner for life. Retirees today should no longer expect that they will have enough money to support themselves during their lifespan if they '‘cash out' their super at retirement. Instead we encourage people to take full advantage of their superannuation, whatever their stage of life, as it remains the most tax-efficient investment environment available," Elkins concluded.
Flexibility and convenience
Now with the full integration of banking facilities, RPAP customers can access their pension funds and other savings such as age pension cheques, personal cheques, dividends from direct shares and the like, directly via a single ATM card. Russell provides the underlying multi-manager investments and ANZ supplies cash management and other banking transaction services. When people go to their local ANZ branch to activate their account, they can also choose additional options such as a credit card, cheque book, or bill payments and direct debits.
Jason Marler, Director, Business Strategy & Operations for Russell Superannuation, said the integrated banking feature means customers can access their pension funds instantly whenever and wherever they need to – with no need to wait for a regular monthly payment, or for a one-off withdrawal to be processed.
He said Russell chose to partner with ANZ due to the bank’s commitment to providing market-leading banking services for older Australians.
"ANZ were willing to work with us to develop a truly unique and integrated offering that was seamless for our customers. ANZ offers fee-free* transactional banking for over 60s – and they have just been recognised as Money Magazine’s 'Seniors Bank of the Year' partly for this reason. We believe ANZ is as committed to offering superior services to this segment of the market as we are at Russell, and we are delighted to be partnering with them in this exciting venture."
For more information, please visit Russell Private Active Pension.
*Excluding other bank ATM charges
**Retirement and Retirement Intentions, July 2006 to June 2007, Australian Bureau of Statistics
Issued by Russell Investment Management Ltd ABN 53 068 338 974, AFS Licence 247185 ("RIM"). This document provides general information only and has not been prepared having regard to your objectives, financial situation or needs. Before making an investment decision, you need to consider whether this information is appropriate to your objectives, financial situation and needs. This information has been compiled from sources considered to be reliable, but is not guaranteed. Past performance is not a reliable indicator of future performance. Any potential investor should consider the latest Product Disclosure Statement ("PDS") in deciding whether to acquire, or to continue to hold, an investment in any Russell product. The PDS can be obtained by visitingor by phoning (02) 9229 5111. RIM is part of the Russell Investment Group ("Russell"). Russell or its associates, officers or employees may have interests in the financial products referred to in this information by acting in various roles including broker or adviser, and may receive fees, brokerage or commissions for acting in these capacities. In addition, Russell or its associates, officers or employees may buy or sell the financial products as principal or agent. MKT/1726/0508.
*AUM Is current as at 31/03/08
PDF Downloads Biographies
Superannuation Team
(PDF Download 194kb)
Media Presentation
The Changing Face of Australian Retirees
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What are the benefits?
For Advisers: At-call access to pension funds with ANZ Prime CMA
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Research
Investment Aspects Of Longevity Risk
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Factsheet
Fact Sheet: Ease yourself into retirement
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