Emilio Gonzalez and David Knox
David Knox, the winner of the inaugural BTIM Retirement Innovation Award, credits a lot of people from a range of disciplines – “not just the actuaries” – for the successful construction of Mercer’s industry-first retirement product.
The Mercer Lifetime Plus Longevity Solution is a pooled account-based investment option with income and longevity risk protection which has already won several other awards – including from Canstar, Chant West and Conexus – before being capped off at the SuperRatings annual awards night last week.
BT Investment Management, the major sponsor for the SuperRatings Awards, came up with the idea to recognise an individual who is helping to meet the needs of an aging population while also taking the opportunity to innovate through the provision of better outcomes for retirees.
Knox said after the award presentation, by BTIM’s chief executive, Emilio Gonzalez, that when he came to send a congratulatory email to everyone who was involved in building the product, there were more than 70 people on his list.
“We had a breadth of experience from which to draw because Mercer had to think through all the possible scenarios, including the extremes,” he said.
The industry recognised the looming problem some years ago but, at the time, account balances were not large enough to cover annuity-style products. People have clearly been worrying about running out of money in their retirement, Knox noted, because most retirees drew down the minimum or close to the minimum allowed with their existing annuities.
He has been an advocate of better retirement solutions for a long time. “I’d always believed that super was there for everyone’s retirement, not primarily for bequests,” he said. “So we had to have an income stream at a low cost, it had to be competitive and attractive, because it is an investment option. And it had to be transparent.”
The product is not an annuity, so it does not require use of a super fund’s capital. The pooling aspect allows for members to get more the longer they live or the earlier they start to invest.
The new award’s process involves nominees from any part of the industry. The key positioning of the award is that it “significantly enhances Australians’ experience in their retirement years”, Gonzalez said.
This could be by way of technology, communications, customer service, a product solution, or simply an administrative initiative that had a major effect on retirees themselves.
The criteria which need to be taken into account in determining success are: originality, impact and measurability of benefits.
Gonzalez said: “David Knox is a worthy recipient of the inaugural BTIM Retirement Innovation Award due to his outstanding work in developing the Mercer Lifetime Plus Longevity Solution as well as his ongoing commitment to the benchmarking of global retirement systems and innovation, through the Melbourne Mercer Global Pension Index.
“We hope this Award will further encourage our industry to significantly enhance Australians’ experience approaching and during retirement, so retirement is something Australians look forward to rather than face with trepidation.”
Knox said he would probably use the $10,000 accompanying the award for travel and continue his work looking for global best practice in the pensions and retirement industry.
NOTE: the author was a member of the judging panel for the award.
Knox takes a bow for work on retirement solutions
Emilio Gonzalez and David Knox