Home / AXA aims for role in super fund retirement solutions debate

(pictured: Laurent Bourlard)

AXA Investment Managers has signalled its intention to be a part of the search for workable retirement solutions for the members of the not-for-profit super funds. It is looking at ways to incorporate some of the funds’ existing strategies and managers in its own design thinking.

Craig Hurt, AXA IM’s director, Australia and New Zealand, said ahead of the AIST Australian Superannuation Investment conference to be held this week in Cairns that he believed the industry was “probably two or three years away from good [retirement products] design”.

He said AXA IM and its related companies such as AXA Life Invest were starting on the journey to discuss all the possibilities with big funds. “We are operating in the B to B (business to business) space, offering to tailor and white label our services… It’s a very nascent market. As it transitions we’d like to be involved.”

Hurt believes that good retirement products represent an important way to help super funds with their member retention. He brought Lourent Bourlard, the deputy chief executive of AXA Life Invest in Paris, to Australia this week to speak on a panel session on global and Australian retirement income solutions at the Cairns conference.

AXA Life Invest and AXA IM jointly produced a paper earlier this year entitled ‘Designing Retirement Solutions That Deliver Income for Life’ which summarises how the need for lifetime income is addressed in different countries. While regulations, tax and industry structures differ across countries, there are features that are similar to the Australian market.

And some of the differences are very positive for Australia. For instance, individual account balances in Australia are almost five times larger than those in the UK and therefore are more able to generate meaningful lifetime income.

The paper says: “… the Australian market might expect to experience a different trend – potentially a larger and faster take-up of solutions that provide guaranteed income for life…”

However, it says: “There is significant scope for improvement in Australia and it is likely that a range of solutions that provide income for life will take time to emerge.”

Bourlard said from Singapore last week that AXA did not pretend to have the “magic solution” to the issues. He said the Australian market was moving quickly but there was a mismatch between what the industry could deliver and their expectations of retirees.

“You can’t guarantee everything [in terms of income streams] because it’s too expensive,” he said. “Expectations need to be adjusted also because of very low interest rates.”

He said the industry needed to invest in education about the different phases of retirement. “Retirement is more granular than it seemed in the past,” he said. “There are different consumption patterns. It’s not one-size-fits-all.”

While, ultimately, the retiree needs around the world are not that much different to each other, the answers are very different, with local regulatory environments being key drivers. Social security difference, for instance, can mean very different risk appetites among individuals.

AXA sold its Australian life insurance business to AMP in 2010 and still acts as a service provider to AMP. The AXA-built ‘North’ retirement product is still managed by AMP.