Should Superannuation Funds Segregate Their Assets?
In 2018 almost two-thirds of superannuation contributions received by APRA-regulated funds were paid back out to members as benefits. What’s more, over 2.8 million accounts will move from the accumulation phase to the pension phase over the next decade. In anticipation of this demographic change, should funds segregate some assets into separate accumulation and pension pools or continue to combine them for scale benefits?
This paper explains what asset segregation is, the key motivations for funds to consider it and why segregation is an individual fund choice. We debunk the myth that segregation is merely a question of scale and show how it relates to the broader strategic question of whether a fund sees its enterprise as one of mass production (of investment returns) or mass customisation.