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FINAL_Retirement-Planning-Research-Brief.pdf
R E S E A R C H B R I E F
RETIREMENT PLANNING IN AUSTRALIA – AN ECOSYSTEM PERSPECTIVE
2018 W R I T T E N B Y T E A G A N A LT S C H WA G E R A N D J O D Y E VA N S
Contents
This research brief is the inaugural report for a three-year project conducted by
Melbourne Business School investigating the Australian Retirement Ecosystem.
This project, entitled 'The Orford Initiative: Improving the retirement outcomes for
Australians by optimising their retirement income and financial security' is funded
by the Orford Foundation in collaboration with the Melbourne Business School.
The project team acknowledges the invaluable support of the Orford
Foundation.
PROJECT TEAM
Dr Jody Evans is Associate Dean, Engagement and Associate Professor, Marketing at Melbourne Business School, The University of Melbourne.
Dr Teagan Altschwager is Senior Research Fellow for the Orford Initiative at Melbourne Business School, The University of Melbourne.
RESEARCH APPROACH
The team adopts an engaged research approach to all projects. Engaged research is based on authentic partnerships with communities and organisations to craft a research program that creates value with and for communities or organisations and that has aligned academic outcomes.
Suggested citation: Altschwager, Teagan and Jody Evans (2018) Retirement
Planning in Australia - an Ecosystem Perspective: Research Brief. The Orford
Initiative: Melbourne Business School. Available at: https://go.mbs.edu/orford/
Acknowledgements
2 EXECUTIVE SUMMARY
3 INTRODUCTION
5 ACADEMIC RESEARCH
11 GOVERNMENT RESEARCH
13 MEDIA PERSPECTIVES
15 INDUSTRY RESEARCH
18 SYNTHESIS OF RESEARCH PERSPECTIVES
22 REFERENCES
MELBOURNE BUSINESS SCHOOL RESEARCH BRIEF 2018 2
Executive Summary
The following research brief highlights the importance of
continued research into retirement planning and savings
behaviours in Australia. Thanks to advances in science,
healthcare and technology we are living longer, which also
means a greater likelihood of outliving one’s retirement savings.
This puts Australians in a financially vulnerable state, and places
additional pressure on an already exhausted Government Age
Pension system. Various implications arising from low
engagement and preparedness for retirement are already
apparent, including women finding themselves in financial
vulnerability in retirement, aged homelessness, elder abuse, as
well as projected issues facing the next generation of Australians.
Continued research on retirement planning is therefore
paramount; the earlier and the better Australians engage in
retirement planning, the greater financial security they will
achieve in retirement.
This research brief establishes the foundation for stage one of a
three-year project conducted by Melbourne Business School
investigating the Australian retirement ecosystem. We argue that
by understanding the viewpoints of members of the ecosystem
(i.e. government agencies, financial planners, superannuation
funds, the media, consumers), we are better able to identify the
mechanisms that will assist retirees to adequately plan for their
retirement and obtain financial security. There is a plethora of
information available on retirement planning in Australia.
However, there is significant disconnect between the
perspectives of industry, government, media and academia, as
well as the inherent biases and limitations of each perspective in
isolation. The benefit of the ecosystem perspective of retirement
lies in its ability to reflect these perspectives, to understand the
diverse relationships and levels of influence within the
ecosystem, and to explore the collective impact the ecosystem
has on Australian retirees.
The four key perspectives addressed in this research brief are:
1. Academic research on retirement savings, which comes from various literature areas including finance and economics,
society and ageing, and marketing. Our review identifies four
categories of drivers impacting retirement planning;
• Social forces from family, friends, and colleagues who provide an informal but critical influence due to the trustworthiness and closeness with the individual
• Economic influences include perceived trustworthiness and strength of the nation’s retirement system, government support, and company pensions. Each drive feelings of security, with subsequent impacts on retirement planning
• Psychological dispositions encompass a broad range of individually unique perspectives towards risk, control, ability to project and plan for the future
• Interactions and interventions consider the efforts made to educate, engage and interact with individuals regarding retirement planning
Academics acknowledge the granular nature of these studies,
and encourage future research to take a broader view of
influences impacting retirement planning. Building on this
recommendation, we adopt the retirement ecosystem
perspective which aims to capture the broad set of interactions,
relationships and influences of members of the ecosystem with
various others.
2. Government research, in particular the Retirement Income Covenant Position paper and the Productivity Commission
Draft Report on Superannuation: Assessing Efficiency and
Competitiveness both released in 2018 are fundamentally
shaping the current dialogue around retirement planning;
specifically, superannuation and retirement products. While
Government provides frameworks and mandates for how the
industry should operate, this relies on acceptance and adoption
from industry players to be effective.
3. Media perspectives reflect government and industry action, and play a large role in driving public sentiment and
understanding of the sector. A common, and problematic, thread
within media reporting is fear. Fear in Government, in
superannuation funds, in financial planners, and fear that the
retirement that Australians imagine and aspire towards will not
be realised. While a wariness of issues and implications from
industry are important, an overemphasis of fear can drive
inaction, which also does not serve the interest of Australians.
4. Industry research in retirement planning is a complex and multi-faceted perspective due to the large number of corporate,
consulting, and industry bodies therein. These reports serve
various purposes, including reputation building, imparting
knowledge and assuming influence within government, industry,
or public dialogue. However, this perspective may suffer from
information saturation and inconsistent messaging, which
inhibits its effectiveness in driving change.
In synthesising these research perspectives, we identify three
key themes of agreement and three corresponding points of
disagreement.
• We agree that Australians are not ready for retirement, however we disagree on who is responsible within the ecosystem
• We share a common focus on problems, however we disagree on the scope of the problem, and who should drive change
• We agree that retirement planning is a complex consumer issue, however we do not consider the overall influence of
various members collectively on the individual.
Finally, we present an exploratory map of the retirement
ecosystem. At the core of the ecosystem is the individual
Australian. Surrounding the individual is their need to consider
retirement planning and saving behaviour, and their various
psychological disposition that influence how they make
retirement planning decisions. Four external influences surround
the individual; social influences (family, friends, spouse,
colleagues/peers), government agencies/ divisions, industry, and
the media. The interrelationships and influences within the
retirement ecosystem will be explored, validated, and further
developed through qualitative interviews with members of the
ecosystem, and consumer focus groups with Australians nearing
or recently entering retirement.
MELBOURNE BUSINESS SCHOOL RESEARCH BRIEF 20183
Introduction
In Australia, people save for retirement through compulsory
contributions to superannuation, as well as through
independent savings and accumulation of assets (i.e. the
family home). In addition, the Government provides the Age
Pension as a replacement or supplementary income for
those with depleted retirement funds. Financial
independence in retirement benefits both the individual and
society; for the individual, substantial retirement savings
means they can enjoy retirement and maintain a comfortable
lifestyle. For society, greater independent retirement savings
means less reliance on Government Age Pension programs,
funded through taxation. Despite the benefits of financial
independence in retirement, the Australian population at
large does not sufficiently engage with retirement planning:
many have a low understanding of how much retirement
savings they will require, how their superannuation
accumulates and the options available to them, nor the
products and options available to them in the decumulation
phase of retirement. Low engagement and low readiness for
retirement puts Australians in severe financial risk in
retirement. Already we are experiencing the flow-on issues
arising from low engagement and preparedness for
retirement;
• Women are financially vulnerable in retirement – women on average have less superannuation accumulation due to salary differences, breaks from the workforce, and/or reliance on partner for financial support (Institute of Actuaries Australia 2015; ASFA 2017b).
• Aged homelessness – while currently a small group, aged homelessness is one of the fastest growing populations seeking assistance in Australia (AIHW 2018).
• Retirement issues for the next generation – with a heightened casualisation of the workforce, combined with greater difficulties in entering the housing market, future generations will have a very different retirement savings portfolio (Institute of Actuaries Australia 2015).
• Elder abuse – the most common of which is financial abuse (Kaspiew, Carson & Rhoades 2015; CBA 2018). Often this abuse is at the hands of a family member, and can stem from 'inheritance impatience' of adult children (Collett 2018).
The importance of continued research on retirement
planning cannot be understated. Ultimately, consumer
engagement in retirement planning has crucial implications
for the broader economic and societal issues facing
Australians, and the earlier we can engage people in
retirement planning, the earlier they can act and the better
off they will be in retirement.
This project will help retirees in Australia to optimise their
lifestyle post-retirement. The preliminary step in achieving
this outcome is to understand the structure of the retirement
ecosystem in Australia, and identify key relevant members
therein. Members of the retirement ecosystem have
considerable influence over what retirement products are
offered to consumers, government legislation that facilitates
or hinders the delivery of various retirement products, as
well as the dissemination of information to consumers. To
understand consumer attitudes and behaviour regarding
retirement, we must first understand the attitudes and
behaviours of those within the retirement ecosystem who
construct and frame the products and information provided
to consumers.
Retirement is an increasingly important topic in Australia considering our ageing population and improved health care enabling people to live longer. This trend has significant implications for ‘longevity risk’, the risk that a person will outlive their retirement savings.
In this research brief, we introduce four key perspectives on
Australian retirement planning – Academic, Government,
Media, and Industry. We consider how these perspectives (1)
help us understand the broad ‘ecosystem’ of retirement
planning, (2) enable us to identify where there are gaps,
inconsistencies or biases in information, and (3) understand
how the broad ‘retirement ecosystem’ impacts Australians
and helps or hinders them in engaging with planning for
retirement. Each of these areas contribute a unique piece to
the overall retirement planning ‘puzzle’, but little research
makes the effort to consider all of these perspectives and
the unique value they provide.
MELBOURNE BUSINESS SCHOOL RESEARCH BRIEF 2018 4
THE AUSTRALIAN RETIREMENT ECOSYSTEM IN 2018
There are two key considerations that frame research on retirement planning.
First, retirement planning and savings are regulated and considered
differently across countries. This makes it difficult to collate findings from
different countries, as even minor changes in how retirement planning,
savings, and government intervention is handled can influence the
retirement ecosystem and individual behaviour in each country. For
example, the fact that Australia has compulsory superannuation
contribution may impact general attitudes towards independently saving
for retirement, as compared to a country where such compulsions are
not mandated.
Second, due to ongoing changes in regulatory frameworks around
retirement savings and government social support, the findings or
sentiments reflected in older studies may no longer be valid.
Indeed, the complex and dynamic nature of the retirement
ecosystem requires continual research to best reflect
contemporary issues and sentiments. For these reasons, the
current review of literature gives preference to research
conducted in the Australian retirement ecosystem, and research
conducted in more recent years to reflect contemporary issues
and sentiments. This review is supplemented with insights
from international research where appropriate.
MELBOURNE BUSINESS SCHOOL RESEARCH BRIEF 20185
The various perspectives of retirement planning, and the benefit of considering the 'ecosystem'.
Academic research on retirement planning is present within
various academic disciplines, including finance & economics
(e.g. Agnew, Bateman & Thorp 2013; Chomik & Piggot 2012;
Gerrans, Moulang, Feng & Strydom 2018; Butt, Donald, Foster,
Thorp & Warren 2018), society & ageing (e.g. Croy, Gerrans &
Speelman 2010; Hershey, Henkens & Van Dalen 2010), and
marketing/psychology (e.g. Hershfield et al. 2011; Goldstein,
Johnson & Sharpe 2008; Ng, Plewa & Sweeney 2016;
Sweeney, Plewa & Zurbruegg 2018). While each of these
perspectives provide unique insights and benefits, they do
not provide a complete account of the varied and complicated
interactions that arise when individuals consider retirement
planning over their life. As stated by Hershey et al. (2010,
p30), “disciplinary accounts can only tell part of the story
when it comes to explaining the range of forces that structure
the thought processes of those who save for retirement”.
While a few key studies (e.g. Hershey et al. 2010) have taken
an interdisciplinary approach, we argue that taking an
ecosystem perspective is beneficial in understanding these
interactions and relationships.
The term ecosystem derives from biology, however it is also
an important analogy for how a community of subjects
(individuals, firms, government, industry bodies) exist within
a given environment or context comprising of various
interactions, relationships and interdependencies between
them (Pilinkiené & Povilas 2014). For this reason, ecosystems
have been explored in business, entrepreneurship, innovation
and industrial perspectives (Pilinkiené and Povilas 2014), as
well as in marketing and management (Vargo & Lusch 2016;
Chandler & Vargo 2011). In fact, a recent marketing study
advocated the importance of taking an ecosystem perspective
in complex service environments, specifically referring to the
financial planning sector (Ng et al. 2016). Ecosystems are
beneficial as a conceptual lens for several reasons:
1. They allow for a more complete observation and analysis of the interconnected network of various subjects (Järvi & Kortelainen 2017). In other words, the ecosystem lens allows us to “zoom out” to a holistic and dynamic perspective of subjects interacting with various others within a context, and reiterates that an individual’s behaviour (or lack thereof ) is not completely understood without the broader level influences and context of that behaviour (Vargo & Lusch 2016).
2. The ecosystem lens enables understanding of multiple perspectives or multiple levels within a context. Järvi and Kortelainen’s (2017, pp218-219) systematic review of business ecosystem research derives three core perspectives; “the individual actor (typically a firm), the relationship between the actors (typically a dyadic inter-firm relationship) and the ecosystem” itself. Chandler and Vargo’s (2011) conceptualisation includes micro (dyads), meso (triads) and macro (complex networks) levels of context. Regardless of terminology, these conceptualisations describe how an ecosystems lens allows us to recognise all subjects in a context, and identify both the granular and broad-level interconnectedness between those subjects.
We now review key studies from academia regarding
different facets of the retirement ecosystem, with a view to
collate these insights (as well as insights from other sections
within this research brief ) into a map of the entire retirement
ecosystem.
Academic research
Drivers of retirement savings and behaviours
Academic studies have sought to evaluate retirement savings
adequacy (Burnett, Davis, Murawski & Wilkinson 2013) as
well as provide long-term projections (Chomik & Piggot 2012).
Academic research addresses a range of pertinent questions
regarding individual’s retirement behaviour, including;
• Why don’t people put more time and effort in understanding and planning for retirement? (Hershey et al. 2010)
• Why do so many people stay in default accumulation options? (Butt et al. 2018)
• Why don’t people make additional voluntary contributions? (Croy et al. 2010)
• Why do people choose to take lump sums in retirement over annuities or other longevity products that would ensure a comfortable income for life? (Brown et al. 2008)
Literature on retirement planning covers various influences
on retirement planning and saving behaviour (and similar
outcomes). Various academic disciplines explore ‘internal and
external environmental factors’ to better understand a myriad
of complex decision-making processes facing both
organisations (Duncan 1972) and individuals (Adams & Rau
2011). In the context of retirement planning Adams & Rau
(2011) conceptualise that, as with any decision-making
process, an individual’s inherent differences and
characteristics in addition to the broader external
environmental frames how that individual prepares for
retirement. The external environment comprises of the
“immediate social environment (family, friends, and the work
organization) as well as the general societal and economic
environment (e.g., social norms regarding retirement, the
status of social security, and stock market performance)”
(Adams & Rau 2011, p3). Likewise, Rickwood & White (2009)
MELBOURNE BUSINESS SCHOOL RESEARCH BRIEF 2018 6
Academic research
explore how an individual’s propensity to save for retirement
is impacted by various internal, external and risk factors. The
strength of Hershey et al.’s (2010) conceptualisation in
particular lies in its multidisciplinary perspective, which is
closely aligned with the ecosystem lens taken in this project.
Using the multidisciplinary categories of social forces,
economic influences and psychological dispositions (Hershey
et al. 2010) as a broad framework, we review the key drivers
studied in academic literature. We also identify and include a
further interventions and interactions category.
Social forces
Social forces encompass the influences a spouse/partner,
family, friends, work colleagues or broad social norms might
have on an individual’s decision making regarding retirement
planning (Hershey et al. 2010; Gerrans et al. 2018; Croy et al.
2010). These forces vary in their degree of personal
connection or closeness with an individual; i.e. spouse/
partner, family and friends comprise the inner-most level of
connection with an individual, where influence is based on
trust and strong personal relationships (Hershey et al. 2010).
Work colleagues are less likely to have the same level of
personal connection and trust, however their social influence
stems from being a respected information source, as well as
sharing similar workplace and financial circumstances to the
individual (Gerrans et al. 2018). At the broadest level of social
influence lies injunctive social norms, where ‘acceptable
behaviours’ perceived by society can also steer individual
decision making (Croy et al. 2010).
As a trustworthy and personal source, social support from
friends, work colleagues and a spouse/partner have been
found to help an individual find clarity in their retirement
goals and consider the future, with subsequent impacts on
retirement planning and saving (Hershey et al. 2010; Payne,
Yorgason & Dew 2014). People adopt financial behaviours
and attitudes through observation and learning from the
experience of family members (Payne et al. 2014). Early
learning experiences from an individual’s parents can
cultivate goals and future-oriented savings habits (Hershey et
al. 2010). Financial attitudes and behaviours derived from
family socialisation are also brought into marital
relationships, whereby an individual’s financial habits are
imparted onto their spouse (Payne et al. 2014). A couple
further develop their financial management practices
together over time as they plan for shared investments and
or expenses (e.g. purchasing a house or raising children), and
in particular prepare and coordinate the timing of retirement
as a couple (Payne et al. 2014).
The basis of peer influence can stem from social learning,
whereby individuals assume that their peer has conducted
significant information search or has high financial
competence, and therefore has confidence in purchasing the
same financial products without conducting independent
information search themselves (Bursztyn, Ederer, Ferman &
Yuchtman 2014). Individuals may also be motivated by social
utility and follow a peer’s financial investments to “keep up
with the Joneses” or to share an experience related to that
investment, for example “peers can follow and discuss
financial news together, track returns together, etc” (Bursztyn
et al. 2014, p2). Work colleagues are respected sources of
information, and are likely to share somewhat similar
financial circumstances as well as access to the same
workplace retirement plans which can also influence financial
behaviour (Gerrans et al. 2018). However, the argument
provided in Gerrans et al. (2018, p163) is based on
probability modelling of a company database, where it was
found that an “individual's propensity to make an investment
strategy change is positively associated with the overall level
of activity within their workplace sub-plan”. We argue that
deeper insights would be gained from consulting individuals
directly to gauge how (and why) they are influenced by their
workplace peers.
Social forces are also apparent on a broader level via
injunctive social norms; “one’s perception of what others
believe to be appropriate conduct” i.e. what one should/
ought/be expected to do (Croy et al. 2010, p261). Injunctive
social norms are argued to significantly motivate an
individual to change retirement investment strategies, as well
as make extra voluntary contributions, with researchers
recommending that future research measure the effect of
such intervention strategies in promotional messages (Croy et
al. 2010).
Economic influences
Economic influences capture country-specific government and
industry frameworks that impact individual planning and
decision making for retirement. From a government
perspective, the perceptions of the Australian retirement
system, government pensions, and general trust in
government each influence an individual’s retirement
planning. Australia is placed among the best retirement
systems globally (Chomik & Piggott 2012; Chomik & Rodgers
2018), with a key facet of the system being compulsory
employer contributions to retirement savings. Although
perhaps counter-intuitive, the perceived role and strength of
the retirement system and government pension is argued to
disincentivise Australians from saving for retirement (Agnew
et al. 2013; Hershey et al. 2010). Agnew et al. (2013, p17)
argue that “the existence of a compulsory employer
MELBOURNE BUSINESS SCHOOL RESEARCH BRIEF 20187
Academic research
contribution rate may well encourage many Australians to
feel that, since they are following government policy
prescriptions, their retirement is secure and therefore does
not need attention”. Furthermore, in Hershey et al.’s (2010)
comparison of US and Dutch consumers they speculate that “a
high-quality pension could, paradoxically, serve under certain
circumstances as a disincentive to save” (Hershey et al. 2010,
p29). These arguments are consistent with the issues
currently faced in Australia; the average Australian has
insufficient retirement savings to achieve financial
independence for the duration of retirement (Burnett et al.
2013), and the majority will require the Age Pension in some
capacity (Chomik & Piggott 2012).
The industry perspective includes perceived quality of
employer pensions, in which it is argued that in certain
circumstances a high-quality employer pension may
demotivate individuals to save (Hershey et al. 2010). Further,
it is acknowledged (but not empirically examined) that
financial planners may be influenced by broader institutional
arrangements, whether it be organisational systems, industry
level policies or government mandates (Ng et al. 2016). The
interrelationships within industry and perceived influences
guiding financial planners, superannuation providers and
others within the retirement ecosystem is unexplored in
academic research, and is therefore of particular interest in
this project, as we argue these complexities contribute to a
lack of confidence and trust in industry.
Psychological dispositions
The term ‘psychological disposition’ covers a broad range of
personality and individual-level factors that impact decision
making. In the context of retirement planning, this refers to
an individual’s level of knowledge necessary to engage in
retirement planning, which may be perpetuated by anxiety
experienced in seeking financial advice (e.g. financial adviser
anxiety). A lack of clear retirement goals and high levels of
procrastination also contribute to low retirement planning.
Psychological dispositions also reflect broader sentiments
regarding one’s perceived level of control over what happens
to them (locus of control), as well as one’s ability to
conceptualise themselves in the distant future as an aged
person.
In the context of retirement planning, the prominent influence
is an individual’s level of financial literacy (Agnew et al. 2013;
Gerrans & Hershey 2017). Australians generally have been
found to possess low financial literacy, however are on par
with similar ‘comparable’ countries (Agnew et al. 2013).
Young, low education, not employed/not in labour force, and
female demographics are most likely to have low financial
literacy, and subsequently tend to also have low engagement
with retirement planning (Agnew et al. 2013). In the specific
context of engaging with a financial planner, low financial
literacy translates into high financial adviser anxiety, or the
“anxiety individuals may have at the prospect of an
encounter with a professional financial adviser” (Gerrans &
Hershey 2017, p55). Financial language and jargon are major
elements of financial adviser anxiety. Individuals with low
financial literacy and high financial adviser anxiety have a
low likelihood of engaging with a financial adviser in the
future, even if it is in their best interest to seek such advice
(Gerrans & Hershey 2017). Further individual-level factors
impact retirement savings and planning, for example financial
retirement goals and procrastination (Topa & Herrador-Alcaide
2016). Goals are important in converting an individual’s
financial knowledge into action (retirement saving
behaviours), while procrastination can inhibit positive
financial outcomes by negatively impacting goal setting, and
restricting the translation of goals into behaviours (Topa &
Herrador-Alcaide 2016).
Other psychological dispositions refer to broader sentiments
towards control. For example, those with an external locus of
control who “attribute life’s outcomes to external factors” will
generally save less and contribute less to their pensions
(Cobb-Clark, Kassenboehmer & Sinning 2016, p114). The
various uncertainties surrounding old age (mortality, quality
of life, retirement legislation, the Age Pension) fuelled by an
external locus of control collectively make a compelling
argument against planning and saving for retirement. In
contrast, individuals with an internal locus of control would
see this same retirement landscape as just cause for saving
more for retirement, as doing so would allow one to take
control and combat these unknowns. Finally, an individual’s
ability to forward-focus and imagine themselves in the future
as an aged person serves as motivation for retirement
planning (Hershfield et al. 2011). Based on the theoretical
concept of psychological connectedness, individuals generally
find difficulty in connecting with a distant future self (e.g. me
in 40 years) versus a near future self (e.g. me in 1 year), and
thus are less likely to make financial decisions in the interest
of a distant future self. This disconnect with one’s distant
future self raises important questions around why people
may disengage with retirement savings that can only be
accessed well into the future.
MELBOURNE BUSINESS SCHOOL RESEARCH BRIEF 2018 8
Interventions and interactions
The final category of drivers within this review encompass
interventions and interactions aimed at improving an
individual’s engagement with financial planning. The emphasis
in these studies is the engaged individual, for example the
nature of interactions between financial planners and their
existing clients, or the helpfulness of personal financial blogs.
What is not addressed, however, is the interventions that are
effective for the disengaged individual.
Personal financial blogs have gained popularity in recent years
as an effective and informal method of obtaining financial
education (Hoffmann & Otteby 2018). However, evidence
suggests that personal finance blogs are mainly used by
individuals who already have higher levels of financial literacy
and who have low perceived financial uncertainty, and are thus
not helping those most in need of financial planning information
(Hoffmann & Otteby 2018). Further, research has explored the
nature of interactions between individuals and their financial
planners, distinguishing broad styles of how financial planners
integrate resources with their clients (Ng et al. 2016). There are
both positive and negative attributes identified of financial
planners from the individual’s perspective. Positive attributes
include education, the financial planner’s expertise,
convenience, and motivation, while negative attributes include
costs in time and effort, emotional stress, ongoing service costs,
and lifestyle sacrifices (Sweeney et al. 2018). These facets
collectively influence the individual’s satisfaction with the
financial decisions made, satisfaction with financial quality of
life, and word of mouth.
While it is acknowledged that individuals have various
preferences in terms of frequency of interactions and the
level of education and participation they desire, and both
positive and negative attributes associated with financial
planners exist, the focus here remains on existing (and longer-
term) clients (Ng et al. 2016; Sweeney et al. 2018). It is
important to understand how customers interact with
financial providers, however these studies do not
acknowledge that only a relatively small number of
individuals engage with a financial planner or take an active
role in saving for retirement (Agnew et al. 2013). Focusing on
long term clients does not help us understand why the
relationship between an individual and financial planner
breaks down (or why there is no relationship to begin with).
While extrapolating these insights may predict disengagement
(for example a mismatch between a financial planner’s style
and their clients preferences may lead to disengagement),
there must also be explicit emphasis on understanding why
some individuals do not engage with retirement planning
from the outset.
A recent meta-analysis revealed that, of the studies included,
the majority supported financial education in improving
financial outcomes (Miller, Reichelstein, Salas & Zia 2015).
However, the analysis also revealed that in the area of
financial education and literacy, there is a dearth of studies
that evaluate the effectiveness or influence of a financial
education intervention (Miller et al. 2015). This reflects a
broader emphasis on exploring and identifying ‘problems’ in
retirement planning, rather than focusing on potential
solutions. The ecosystem perspective taken in this project
addresses these issues by allowing us to investigate all types
of consumers, irrespective of their level of engagement.
Academic research
In summary, while there is a plethora of research that
identifies and measures the influence of various
factors on retirement planning, savings and
behaviours, there is a tendency for studies to take a
siloed (from a discipline perspective) or granular
approach whereby further impacting variables are
acknowledged (e.g. Croy et al. 2010; Ng et al. 2016;
Topa & Herrador-Alcaide 2016); researchers advocate
for future studies to take a ‘broader view’ of the
various antecedents influencing retirement savings
behaviours. The contribution of the ecosystem
approach taken in this project lies in the ability to
identify and explore a broad range of factors in
combination, as well as the interrelationships that
exist between various subjects.
MELBOURNE BUSINESS SCHOOL RESEARCH BRIEF 20189
KEY TAKEAWAYS
• Retirement planning is considered by various academic disciplines, including finance/economics, society and ageing, and marketing
• Four categories of drivers are apparent: social forces, economic influences, psychological dispositions, and interventions and interactions
• Research often has a granular focus, acknowledging that a ‘broader view’ needs to be taken
• An ecosystem perspective allows us to ‘zoom out’ and observe the various dynamic and complex interactions and relationships influencing individuals
ACADEMIC TAKEAWAYS
MELBOURNE BUSINESS SCHOOL RESEARCH BRIEF 2018 10
ACADEMIC TAKEAWAYS
MELBOURNE BUSINESS SCHOOL RESEARCH BRIEF 201811
1. The Retirement Income Covenant Position Paper (Australian
Government the Treasury 2018).
The introduction of the Superannuation Industry (Supervision)
Act of 1993 (SIS Act) mandates employer contributions to an
individual’s retirement fund. While previous modifications and
covenants have been integrated into the SIS Act throughout its
history, these changes have focused on fund accumulation
rather than how funds decumulate in retirement (Australian
Government the Treasury 2018). The retirement income
covenant is the first step of the Government’s ‘retirement
income framework’ to address the decumulation phase of
superannuation (Australian Government the Treasury 2018).
The key principles of the covenant are the requirement of
trustees (financial providers/ superannuation funds) to develop
a retirement income strategy for individuals and provide a
flagship Comprehensive Income Product for Retirement (CIPR).
Trustees also need to engage individuals in understanding the
choices available to them concerning the retirement income
products on offer (Australian Government the Treasury 2018).
Although trustees would be required to offer a CIPR, the
Government has not mandated that individuals must take a
CIPR (Australian Government the Treasury 2018).
The Retirement Income Covenant Position Paper represents one
of the largest regulatory interventions to the SIS Act since its
inception, and has major implications for all within the
retirement ecosystem in that an entirely new product(s) must
be developed in-house or facilitated via a third-party provider.
What is interesting about the covenant, and important to its
ultimate success, is the emphasis on engagement while not
mandating that individuals take a CIPR. Lifetime annuity
products are not a new concept; however, they have
experienced rather low levels of adoption (O’Meara, Sharma &
Bruhn 2015). Even in the presence of the covenant, individuals
are still not obligated to take a CIPR, and even if trustees have
such a product on offer, if the engagement and sharing of
information is not compelling or even understood by
individuals, then the success of converting them to CIPRs is
questionable.
2. The Productivity Commission Draft Report on
Superannuation: Assessing Efficiency and Competitiveness
(Productivity Commission 2018).
Over the past few years the Productivity Commission has been
tasked with conducting a three-stage review of the Australian
superannuation system. Stage one established efficiency and
competitiveness criteria by which the superannuation system
could be assessed; stage two developed alternative models for
allocating default fund members to products (Productivity
Commission 2018). The third and final stage, released in April
2018, provided the assessment of efficiency and
competitiveness across the majority of Australian trustees
(financial providers/ superannuation funds). While there are
various findings and recommendations within the report, the
core issue comes back to individual engagement. Individuals
generally show little engagement with retirement planning
(specifically superannuation in this report) which manifests in
two key ways: (1) many have more than one superannuation
account, and (2) the majority of individuals have default funds
(recommended by their employer) and default plans. The report
highlights personal and industry factors contributing to
disengagement – on a personal level, individuals may not have
the time, financial literacy or inclination to better understand
superannuation (and retirement planning at large). In terms of
industry factors, individuals are often faced with complicated
and inconsistent information from trustees (and hence are
unable to accurately compare offers). In addition, financial
planners have demonstrated widely dispersed performance,
however their quality is difficult for individuals to compare or
assess. Ongoing disengagement on a broad scale puts
The Australian Government has released two key papers in 2018 that are fundamentally shaping the current dialogue around retirement planning; specifically, superannuation and retirement products.
Government research
individuals in a vulnerable position, as superannuation funds
and financial planners do not feel pressure to change their
offering (Productivity Commission 2018).
The Productivity Commission’s recommendation in relation to
this issue has two core themes – the first is to engage
individuals to interact more with trustees, and gain greater
knowledge and understanding of the financial planning system.
The second is to further mandate trustees to provide better
products (including defaults for non-engaged members) and
consistent information to enable comparisons between
offerings (Productivity Commission 2018). Further
recommendations aim at improving transparency of the
retirement planning system, with less opportunity for
exploitation; various Government departments including ASIC
(the Australian Securities & Investments Commission), APRA
(the Australian Prudential Regulation Authority), and ATO (the
Australian Taxation Office) have been tasked with roles in
improving system transparency.
The Government perspective towards retirement planning is
beneficial as a ‘roadmap’ and identifies the various roles and
requirements of financial providers and superannuation funds,
as well as Government bodies who are tasked with imposing
regulation on various parts of the ecosystem. It also aids in our
understanding of what is mandatory for trustees to follow, and
what is only recommended or self-regulated. It reflects an
aspiration of how the system is meant to work from the
Government’s perspective, rather than what occurs in practice.
These reports do not necessarily reflect industry compliance to
regulation. From an individual perspective, while these reports
do acknowledge (dis)engagement, there is not a comprehensive
understanding of where individuals seek retirement planning
information and why – this can include social influences and
the media. It also fails to recognise or address issues
individuals might have with the Government itself.
MELBOURNE BUSINESS SCHOOL RESEARCH BRIEF 2018 12
KEY TAKEAWAYS
• The Government perspective provides a broad 'roadmap' identifying various players and their roles within the retirement ecosystem
• However, it reflects how the ecosystem is meant to work, rather than reality
• Consumers have additional sources of information outside of the ‘formal’ channels of trustees and government departments (i.e. social influences and media)
GOVERNMENT TAKEAWAYS
MELBOURNE BUSINESS SCHOOL RESEARCH BRIEF 201813
Media perspectives
Retirement is an ongoing point of interest for Australian media,
with the overarching message that the average Australian does
not have enough accumulated superannuation at retirement (Das
2017; Hendy 2017). The media plays a considerable role in
shaping public sentiment towards retirement planning,
perceptions towards Government, financial planners and
superannuation funds, as well as aspirations and expectations of
what retirement should look like. Each of these areas are
commonly fuelled by fear; fear that one is on a trajectory
towards financial vulnerability in retirement, without the
financial literacy to understand or change their situation; that
superannuation funds, financial planners and even Government
act in their own self-interest rather than considering the
livelihoods of the people they serve; and that this image of the
‘golden years’ is being taken from them.
Perceptions of Government, financial planners and
superannuation funds
The current dialogue concerning government and retirement
planning in the media focuses on the Productivity Commission
Draft Report on Superannuation, and (to a lesser extent) the
Retirement Income Covenant Position paper. The media acts as a
‘facilitator’ or interpreter of the report findings and
recommendations to the general public, however, their
interpretation is not always accurate or comprehensive.
For example, Roddan’s (2018) interpretation of the Retirement
Income Covenant Position paper is that Comprehensive Income
Products for Retirement (CIPRs) would be introduced as a default
product to members, and eludes that individuals may be forced
to (or unknowingly agree to) “lock up” or “hand over a large
chunk of savings in return for a steady income”. This
interpretation is problematic for several reasons. First, it
misrepresents the recommendations in the covenant paper; the
paper recommends that all trustees must offer at CIPR, but
clearly states that individuals are not obligated to take this
product, nor that this product would become a default option.
Second, it fuels distrust in the Government and scepticism of
CIPR products by using the emotive terms “lock up” or “hand
over” people’s savings. Public trust in the banking sector in
general has taken a considerable hit following the Royal
Commission’s investigation of the banking sector, with
speculation that a similar trend will result from the
superannuation investigation. Further, the Government has been
criticised in the media for ‘politicising’ superannuation to reflect
party ideology and gain voter support rather than attempting to
encourage positive change to the retirement income system
(Whiteley 2018). A similar fear-based strategy is apparent with
regards to sentiments towards financial planners. The following
quote from Klan’s (2018) “Fleecing the Lambs of Superannuation”
article typifies the emotive language found in the media;
“The [fees, charges and asset management costs] is the Maserati
you just saw rev past you at the shops, a few thousand Louis
Vuitton handbags and designer suits, and the Sydney Harbour
mansion you read about last week that sold for $34 million… Over
time, given the wonders of compound interest, the cost to you is
enormous. It’s the holiday you can’t afford for your wife’s 70th
birthday, the slightly expensive toy you ‘really shouldn’t’ buy your
first grandchild for acing his first school test, or not being treated
with care in your sunset years following decades of hard work
and countless super contributions.”
This article conjures feelings of fear (loss of quality of life in
retirement) and resentment towards companies who, Klan (2018)
argues, profit from the hardship of individuals. This emotive
reporting fuels a lack of trust in financial institutions and
negativity towards superannuation, and is compounded by
‘information asymmetry’ i.e. the comparative financial literacy of
individuals versus finance professionals (Klan 2018).
Fears, aspirations and expectations of retirement
Negative expectations (fear appeals) surround working longer/
until a later age (Leggatt 2018), or not retiring at all according to
Das’ (2017) article “Retirement in Australia is unrealisable for
most workers” in the Australian Financial Review. Indeed,
Leggatt (2018) also somewhat eludes to this by discussing the
potential for contingency work (e.g. Uber) after retirement. Das
(2017) attributes this to Australia’s significant household debt,
the fact that retirement savings need to last us longer as well as
in the face of increasing healthcare costs, and from Government
perspective their debts and weaknesses having a flow-on effect
for self-reliance (less subsidies for healthcare for example). The
issue is even worse for younger generations faced with greater
contingency in work (lowering their superannuation balances),
and a diminishing working population who will be taxed greatly
to support older generations. Articles including Barro (2018) take
fear appeals to the extreme, titled “’I go without food’: Struggling
pensioners reveal what retirement is like”. This article illustrates
the lives of elderly women living on the poverty line, unable to
pay for essential items and bills, creating a miserable and
isolating retirement.
Aspirations driven in the media of ‘what retirement should look
like’ are varied and extensive, from increased longevity and
wellness, to technology aiding us in living a more positive
lifestyle in retirement (Leggatt 2018). A common aspiration in
current media is relocation in retirement, whether it be
domestically (Hendy 2017) or internationally (Gillespie 2018;
Hendy 2017). Gillespie (2018) romanticises the idea of overseas
retirement, linking it to ideals of financial independence/home
ownership, enhanced lifestyle compared to Australia, medical
tourism (to alleviate fear of foreign healthcare systems), earlier
retirement (particular importance in light of the ongoing dialogue
of Australians having to work later in life), travel and adventure,
and expat communities. One article that received considerable
attention was from Seyrak (2018) in ABC News, titled “Why I
decided to skip home ownership to retire at the ripe age of 35”.
The article raises issues around financial hardship of home
ownership, particularly expensive capital cities, the benefits and
considerable risks in the share market, along with challenging
conventions of materialism, priorities, flexibility in spending and
working. In general, these aspirational stories together with
fear-based reporting can further fuel public fear by driving a
deeper wedge between aspiration and reality; aspirations of
independence, early retirement, and enjoyment throughout
retirement are not being realised because of actions by those in
the retirement ecosystem (Government, financial providers and
superannuation funds).
MELBOURNE BUSINESS SCHOOL RESEARCH BRIEF 2018 14
MEDIA TAKEAWAYS
Expectations regarding Government benefits are also raised. The
media commonly discusses the role of Government benefits in
supplementing income or providing financial assistance for
everyday products and services for retirees. For example, a
quote in Hendy’s (2017) article regarding a retired couple
downsizing their family home states “the principal place of
residence is exempt from the asset test for the age pension,
therefore by downsizing their property it may result in them
either reducing their age pension entitlement or losing it
altogether. Similarly, Gillespie’s (2018) article advises on
conditions to access an Australian pension while living abroad. It
is interesting to consider whether this ever-present public
dialogue of ‘how best to navigate government systems’ fuels
pre-existing feelings of entitlement towards government support
in retirement. This sense of entitlement could have implications
for individual’s perceived necessity in independently financing
and, hence planning for, retirement.
Consistent with a fear-based approach, there is a tendency in
media articles to dwell on the problems rather than propose
solutions. The few solutions that are recommended are
superficial (Hendy 2017) or ill-advised. For example, Klan (2018)
advocates for independent investments, rather than having a
financial planner. Seyrak (2018) also discusses managing
independent investments. However, these recommendations do
not consider the consumer’s level of financial literacy; taking on
investment decisions independently is not advisable for
consumers with low financial literacy.
KEY TAKEAWAYS
• Media is the most widespread distribution of information to the public, and is pivotal in driving public sentiment
• The media acts as a ‘translator’ of complicated Government and financial reporting, however, can be over-simplified or leave out key considerations
• Fear-driven reporting grabs public attention, but doesn’t incite an individual to engage with financial planning for retirement
• Focuses on blame (often directed at Government and financial providers/ superannuation funds) rather than solutions and actions
• Considering various perspectives and questioning the actions of the retirement ecosystem is an important exercise for the public, if it facilitates engagement (too much scepticism/fear leads the public to disengagement and inaction)
• It may be difficult for the public to distinguish a journalist’s biases and personal perspectives from objectivity in reporting
MELBOURNE BUSINESS SCHOOL RESEARCH BRIEF 201815
Industry research
Industry research in retirement planning is extensive and
multi-faceted. As a complex and heavily regulated industry,
superannuation and financial planning for retirement not only
consists of a large number of companies and offerings, but also
extensive representation through industry bodies, associations
and institutes. Prominent industry bodies include the Actuaries
Institute, the Association for Superannuation Funds of Australia
(ASFA), the Australian Institute of Superannuation Trustees
(AIST), the Financial Planning Association of Australia (FPA),
Industry Fund Services (IFS), Self-Managed Super Fund (SMSF)
Association, and Industry Super Australia to name a few. In
addition to peak bodies, industry research is also published from
individual superannuation funds and financial planners as part of
their thought leadership or member engagement/marketing
objectives. Further, consulting firms produce reports either
independently, or in collaboration with a peak body,
superannuation fund or financial planner. The core purpose
behind these reports stems back to reputation building and
solidifying their position as an authority in the ecosystem.
Reports are also created for various audiences, namely
government, industry, or the public.
Reports to inform government policy are either general calls for
policy change, or are in response to specific government papers;
the key government papers of concern in current dialogue
include the retirement income covenant position paper
(Australian Government the Treasury 2018) and the Productivity
Commission draft report on superannuation: assessing efficiency
and competitiveness (Productivity Commission 2018). There is
general agreement across these reports that there is a low level
of readiness/preparedness for retirement (Institute of Actuaries
Australia 2015; ASFA 2017b). Findings from a multi-country
study of Australia, the UK and America reveal that key issues
around preparedness include “knowing how much they will need
when they retire, how long their money will last, and preparing
for the risks associated with longevity, chronic ill health, and
being forced to stop work unexpectedly early” (American
Academy of Actuaries et al. 2017, p3). Further, foundational
questions around the purpose and intent of superannuation are
raised. For example, a report from the Institute of Actuaries
Australia (2015, p2) queries;
“Is the system working? What is it for – to build a nest egg or
provide an income stream? Should that stream provide a modest
or comfortable living standard? … We can only really gauge
answers to these questions when we have an agreed set of
superannuation objectives enshrined in legislation – currently they
do not exist”.
Interestingly the report calls for government to further clarify
the objectives of superannuation, however this fails to recognise
or capture the general public’s existing sentiments towards how
they plan for retirement, and how they wish to use their
retirement accumulation. While government changes can
encourage or dissuade individual behaviours to a certain extent,
a person’s perceptions around lump sums versus income streams
(for example) are likely to be deeply engrained. Changes
mandated by government without consideration of public
sentiments are like to cause friction and resistance, rather than
positive change. Viewing the retirement ecosystem allows us to
capture and compare various sentiments held by different
subjects (e.g. public versus government), and identify moments
of friction that inhibit change.
Industry reporting can also seek to more directly inform and
engage the public. These reports are often characterised by a
simplified language around complex financial information or
government reporting, for example Smith’s (2018) article
published on Canstar titled “What is the Productivity
Commission’s Superannuation Report?”. Further, ASFA’s report
titled “Mythbusters - myths that super will come up short” (ASFA
2017a) responds to various commentary from consultants and
government that criticise the performance of the superannuation
system and its providers. The report advocates for the current
superannuation system across various factors; (1) the positive
impact of superannuation on the Age Pension – including a
plateau in national expenditure on the Age Pension, take-up of
the Age Pension in a part of full capacity, as well as higher
self-funded retirement incomes, (2) superannuation being the
focal savings mechanism for retirement, and providing greater
return on investment compared to external savings options, and
(3) superannuation providers providing good returns for
members, as well as the necessity of fees (ASFA 2017a). This
report, however, is somewhat inconsistent in overall tone with
other ASFA publications released in the same year. For example,
the ASFA (2017b) publication titled “Superannuation account
balances by age and gender” provides commentary and insights
from the most recent release of data from the Australian Bureau
of Statistics Survey of Income and Housing regarding
superannuation. While recognising that more positive
superannuation values in recent years reflect maturity of the
system, the average superannuation balance at retirement will
“fall well short of the $545000 needed for a comfortable
retirement (according to the ASFA retirement standard) for a
single person”, and concludes that many retirees will require
assistance from the Age Pension (ASFA 2017b, p5). While
perhaps the intention of one article (ASFA 2017a) was to
enhance public assurance in the superannuation system and the
other (ASFA 2017b) to encourage government policy change,
these conflicting messages are not in the best interest of the
general public as it can cause confusion and distrust.
In summary, while all contributors from industry have valid
perspectives and unique contributions to the financial planning
for retirement dialogue, a number of questions arise; with such
an abundance of information and industry representation from
bodies/associations and the like, who stands out as a key
authority? Does an abundance of industry bodies help the
industry overall, or does it create confusion? Further, the
question of objectivity also comes into play; if industry bodies
require the support of those within the industry to thrive, then
are their research projects and reports entirely objective?
MELBOURNE BUSINESS SCHOOL RESEARCH BRIEF 2018 16
KEY TAKEAWAYS
• Industry perspectives come from peak bodies, superannuation providers/financial planners, and consultancy groups
• Industry research and reporting for various purposes, including government policy, reputation building, and public education/engagement
• There is a tendency for industry to push responsibility for public engagement on to government
• With such a saturated market of peak bodies and other contributors, who stands out as a key authority? Who can drive change (on a policy/ industry/consumer level)? Who is objective?
INDUSTRY TAKEAWAYS
MELBOURNE BUSINESS SCHOOL RESEARCH BRIEF 201817
RESEARCH SYNTHESIS
MELBOURNE BUSINESS SCHOOL RESEARCH BRIEF 2018 18
Synthesis of research perspectives
Each of the perspectives highlighted in this research brief –
academic, government, media and industry – represent valid
and unique insights, and overall indicate that there is a wealth
of valuable research available on various facets of the
retirement ecosystem. However, each perspective also comes
with its own frame of reference, priorities, and subsequent
limitations. By bringing these perspectives together, we can
begin to delineate points of agreement and disagreement,
identify areas where we need further investigation, and create
a map of the retirement ecosystem in Australia.
1a. We agree that Australians are not ready for retirement
Sources agree that Australians are not prepared for retirement.
Academia argues that from an attitudinal and behavioural
perspective, individuals do not adequately prioritise or plan
for retirement. Industry reflections mirror this perspective,
with projections indicating that the average person will not
save enough to ensure financial independence for the duration
of their retirement. Changes in Government policy reflect the
fact that Australians are underprepared, with two key papers
in 2018 directed specifically at efficiency of superannuation
and recommendations for CIPRs to combat this issue. Media
fuels this issue with a dialogue of fear that individuals who
are unprepared for retirement will face financial and
emotional hardship.
1b. We disagree on who is responsible within the ecosystem
Where these perspectives differ is in determining who within
the retirement ecosystem is responsible for this
unpreparedness. For instance, academic literature identifies
financial literacy as an individual attribute, and hence
something an individual can actively change. In contrast, when
the media discusses financial literacy, the focus is on
information asymmetry – the level of information available to
and understood by the public compared to government and
industry. This emphasis places blame primarily on government
and industry ‘withholding’ information, rather than
encouraging individuals to gain information independently. In
reality, the responsibility should fall somewhere in the middle,
where individuals take ownership and responsibility of their
retirement future, and where government and industry
facilitate the dissemination of accurate and helpful
information to assist individuals in making those choices.
2a. We share a common focus on problems
There is a consistent focus on identifying the retirement
planning problems (and assigning blame), rather than
providing solutions. The identified problems are various, and
include but are not limited to:
• Insufficient government regulation
• Inconsistent information provided by funds that limit individuals in making product comparisons
• Poor financial literacy or simply low levels of interest in the topic
• Choice overload of superannuation plans, options within plans, or in choosing a financial planner
• Difficulties in comparing financial planners, or having assurance in the quality of their advice
• Competing government parties ‘politicising’ the issue of retirement rather than facilitating change
• Lack of trust in superannuation funds or financial planners
The media, in particular, as the most widespread distribution
of information to the public, is pivotal in driving public
sentiment. However, the media tends to fuel this problem-
centric mindset, driving public fear and scepticism of
ecosystem members. While it is important for the public to
understand and identify limitations or biases in the ecosystem,
it can lead to inaction and disengagement when the level of
fear and distrust becomes too severe – an outcome which also
doesn’t serve the public’s best interest.
2b. We disagree on the scope of the problem, and who should drive change
Again, where perspectives differ is in determining who within
the retirement ecosystem should facilitate change and drive
solutions. The list of problems above each relate to specific
interrelationships between ecosystem members, for example
between government and industry, between industry and the
individual, between government and the individual, or indeed
inherent sentiments within an individual (literacy and
interest). With such a plethora of ‘problems’, who is
responsible for creating solutions? The relationship between
government and industry is pertinent in this regard.
Government dialogue seems to push industry to take the lead
in driving change, while the industry perspective argues that
government should take responsibility for providing
frameworks for change that industry can follow.
3a. We agree that retirement planning is a complex consumer issue
The varying voices and perspectives on the issue of retirement
in Australia reflect the fact that retirement planning is a
complex problem, with various (and at times conflicting)
sources of information available to individuals. In addition,
numerous academic disciplines have identified various drivers
covering social forces, economic influences, psychological
dispositions, and interventions and interactions. However,
these studies often take a granular focus which ignores
extraneous impacts and interrelationships also at play. It is for
this reason that an ecosystem perspective is so valuable. A key
benefit of the ecosystem perspective is the ability to identify
the various dynamic and complex interactions, relationships
and interdependencies occurring between ecosystem
members. While research has advocated for its use, there is
little academic empirical inquiry into the retirement ecosystem
in its entirety.
RESEARCH SYNTHESIS
MELBOURNE BUSINESS SCHOOL RESEARCH BRIEF 201819
Synthesis of research perspectives
3b. We do not consider the overall influence of various members collectively on the individual
The various research sources summated in this research brief
tend to try and identify isolated cause-and-effect between a
specific member of the ecosystem (e.g. government, industry)
and the individual. In reality, these influences are not isolated,
nor are they linear. Rather, various influences will be evaluated
and compared, and in the case of conflicting information the
individual will attribute their own rationale for this discrepancy.
For example, if information from industry and the media are
inconsistent, the individual then makes a judgment of which
member of the ecosystem is ‘correct’ and why. In particular, the
role of the media in disseminating, translating, or offering
conflicting information to other members of the ecosystem is
predominantly overlooked. However, this influence is crucial
because at each moment when an individual receives conflicting
information from ecosystem members, there is the potential to
dilute the strength of that information. Therefore, the only way
to comprehensively understand the relative and cumulative
impact of various influences framing retirement decision
making is to identify and evaluate the retirement ecosystem on
a holistic and comprehensive level. We have developed an
exploratory map of the retirement ecosystem, based on the
preliminary review of research perspectives.
An initial framework of the Australian Retirement Ecosystem
Our framework (figure 1) highlights key members within the
retirement ecosystem in Australia. At the core of the ecosystem
is the individual Australian, surrounded by the various
influences that frame their perspectives and decision making
regarding retirement. An individual’s life stage will also dictate
their level of knowledge, engagement and contact with other
ecosystem members as they progress through accumulation, to
transition, to decumulation stages of retirement.
Surrounding the individual is their need to consider retirement
planning and saving behaviour. This manifests in various
ways, from their level of knowledge and engagement, to the
likelihood of that individual exhibiting particular behaviours.
Those with low engagement are likely to stay with default
funds/options, and have multiple superannuation accounts.
Those with high engagement are likely to make independent
investments or additional contributions to superannuation,
and may have knowledge of and interest in various retirement
products including CIPRs.
The individual’s psychological disposition influences how they
prioritise retirement planning and saving, as well as how they
make decisions. Psychological disposition covers various
attributes (e.g. risk aversion, retirement goal clarity, financial
planner anxiety, procrastination, locus of control) that impact
financial decision-making for retirement. Individuals with clear
retirement goals and an internal locus of control are more
likely to engage in retirement planning and saving behaviour,
while those who are risk averse, have financial planner
anxiety or tend to procrastinate may engage in less retirement
planning and saving behaviours.
Social influences (family, friends, spouse, colleagues/peers) are
an important source of informal, trusted knowledge. It is
important to recognise that each social influence has
developed their perceptions based on their interactions with
the same broad groups of members within the ecosystem, i.e.
their own unique experience with government, industry, the
media, and others within their social connections all frame and
build the recommendations that they in turn pass on to others.
Therefore, social influences can also indirectly distribute
government, industry, and/or media information to the
individual, albeit with their own interpretation or analysis of
that information.
ECOSYSTEM FRAMEWORK
Government agencies/ divisions play various roles in
regulation, compulsory contributions, consumer information
(e.g. ASIC, ATO, APRA) as well as the provision of social
services i.e. the Age Pension. Government regulations have a
direct impact on what industry providers can offer to
individuals, as well as how they share information.
Government also aids in facilitating information for individuals
to engage and make financial decisions (both directly to
individuals and by mandating what information industry must
provide).
Industry bodies and consultants aim to influence government
regulation, industry behaviours and public engagement.
Superannuation funds and financial planners are the key
providers of retirement products, however an individual’s
employer also plays a role in deciding on default funds.
The media drives public sentiment around retirement, and
tries to influence public attitudes towards government and
industry. The media also plays a role in ‘translating’ industry
and government information – this can have positive and
negative consequences. On the one hand, media drives public
awareness and knowledge around current important topics
and changes happening in government and industry that will
impact their retirement planning and financial security in
retirement. Government and industry can therefore influence
individuals via information delivered through the media. On
the other hand, this information has the potential to be
misinterpreted, or veiled with the media’s own interpretation
– this can impact on the quality of information being shared,
as well as the effectiveness of proposed strategies or
interventions.
MELBOURNE BUSINESS SCHOOL RESEARCH BRIEF 2018 20
ECOSYSTEM FRAMEWORK
The interrelationships and influences within the retirement
ecosystem will be explored, validated, and further developed
through qualitative inquiry. Findings from qualitative interviews
and focus groups will help us to more accurately and
comprehensively map the retirement ecosystem and understand
the various interactions, relationships and interdependencies
therein. From here we can begin to make recommendations of
how to build individual engagement with retirement planning,
and in a manner that will actually drive change.
Figure 1: An initial framework of the Australian Retirement Ecosystem
INDIVIDUAL
RETIREMENT PLANNING & SAVING BEHAVIOUR
Financial planner anxiety
Locus of control
Risk aversion
Retirement goal clarity
Multiple super
accounts
Additional contributions
Retirement products e.g.
CIPRs
Knowledge & engagement
Default funds & options
ATO
APRA
DHS – Age
Pension
The Treasury – Productivity Commission & Retirement
Income Covenant Paper
General newspapers
(e.g. Australian, Herald Sun,
The Age, ABC)
Financial publications
(e.g. Fin Review, Money Mag)
Media influencers
TV shows (e.g. ACA, Today
Tonight, 7:30 report)
Individual’s employer
Financial planners
Industry bodies
Superannuation funds
Work colleagues/
peers
Spouse
Friends
Family
ASIC
Procrastination
PSYCHOLOGICAL DISPOSITION
MELBOURNE BUSINESS SCHOOL RESEARCH BRIEF 201821
CONCLUDING REMARKS
In conclusion, this research brief provides a foundation for a three-year
project conducted by Melbourne Business School, made possible by a
generous donation from the Orford Foundation. The research brief has
reviewed the various perspectives of government, media, industry and
academia towards retirement planning, and has argued the benefit of
utilising an ecosystem perspective to derive more comprehensive
understanding of the various interactions, relationships and
interdependencies between various subjects.
We have commenced the first stage of exploratory research, in
which we conduct interviews with key members of the retirement
ecosystem and consumer focus groups. These findings will be
contrasted and analysed to further develop our preliminary map
of the retirement ecosystem. This will ultimately aid in
understanding how information is disseminated to the public,
and likewise where individuals actively seek out information for
retirement planning. Subsequent research phases will follow in
the second and third year (2019-2020).
If you would like to know more about this research initiative
or be involved, please contact the project lead:
Dr Teagan Altschwager
Senior Research Fellow
Melbourne Business School
MELBOURNE BUSINESS SCHOOL RESEARCH BRIEF 2018 22
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Dr Jody Evans
Associate Dean, Engagement
Associate Professor, Marketing
Melbourne Business School
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