SS&C Technologies Holdings, Inc. (SSNC) Earnings Call Transcript & Summary

Good morning, and good evening everyone. Joining from Australia and from the U.K. Thank you for joining our webinar at Common Goals and Converging Paths, comparing the DC pensions markets in the U.K. and the Australian superannuation market. My name is Will Dunn, I'm responsible for sales across our Life & Pensions business in the EMEA and in the U.K. And I'm delighted to be joined by some esteemed industry experts from the U.K. and Australia. From Mine Super, a profit to members super fund, we have Vasyl Nair, Group CEO; and Seamus Collins, CIO, Mine Super. From Ernst & Young, we have John O'Sullivan, he's the Director working with member to superannuation fund across Australia on a range of topics. I'm also joined by Jason Whyte from Ernst & Young, who's based in the U.K. and the financial services practices, an associate partner. And finally, but not least, we have Phil Parkinson, who is Head of DC for Mercer in the U.K. So before we begin the questions, I think it's worth mentioning that, obviously, both markets are going through a huge change, they both facing common challenges, common demographic challenges. But both markets are at different stages in the development in terms of pensions. In the U.K. here, we've only had auto enrollment for just coming up to 10 years, whereas in Australia, mandatory contributions for pensions have been in place since 1992. And looking at the split between assets of defined benefit and defined contribution, it's a stark contrast with the U.K. having only 19% in DC pensions today versus in Australia where we got 87% in DC pensions assets today. Clearly, we're expecting growth in the U.K. is going to be huge with the move to DC and the fast base of auto enrollment as is kicked off over the last 10 years. So is there much to learn from Australia, who's a much more developed market in this space, we'll find out. So both markets are facing similar challenges, but also one very common aim, which is to help them achieve better outcomes in retirement, and both are comprising that question and what can they do to improve outcomes and help them in this to have a better time. So that's where we'll start today. And so Phil, I'm going to come to you first. I guess when you're thinking about improving outcome, it's not just about maximizing the timing to accumulation. I think it's more than that. Maybe what are Mercer and other providers in the U.K. doing in that space?

Thanks. Well, yes, great to be here, first of all. Look, there's a lot going on in the U.K. market full stop as we -- I think, as you said, as we mature as a DC market, there's a large amount of change happening with a lot of U.K. schemes, typically Single Employer Trust moving to Master Trust and a regulator that's been encouraging that. When it comes to your question about, well, outcomes and how do we -- what do we focus on I think it's important to recognize, first of all, as you said, the auto enrollment has done a good job in terms of that heavy lifting and getting people contributing well perhaps at a debate later about whether they're contributing enough. But leaving that aside, of course, then as a Master Trust provider, it's have been us to think about will people have enough to retire and how do we invest their assets and engage with them to increase the likelihood of them achieving their own unique retirement goals. And now of course, there is an investment element to that, making sure that we're investing in the right assets at the right time, taking the right risk and managing those assets to maximize the likelihood of them having a large enough pop to sustain their income needs of retirement. But I think just focusing on the investments, all the point of retirement is probably a little too late. So I think one of the things that Mercer that we're certainly focused on is just making sure people start early with their retirement planning and that we use engagement techniques and the technology that we're deploying to try and increase ownership for their retirement savings journey. I think in the U.K., we're still culturally kind of went to this sort of DP pensions idea that an income for life will be provided. So I think as people mature with more and more DC pots in their savings, they need to understand that they will need to maybe make small changes earlier on to increase the likelihood of having the retirement income they desire. So I think starting early, focusing on real outcomes and helping members to do that is where we're focusing our efforts. But of course, making sure we do that with a long-term mindset because we -- pensions are a long-term investment. So I think engagement in technology early on, but all around supporting a member to plan for retirement.

Yes. Thanks, Phil. I think that's great. It can start as you say, it's not about at the end, you've got to be thinking about this from an early age once you start, and that's kind of the difficulty, I guess, in inspiring us. It's particularly young people to get engaged. So maybe, Jason, if I can come to you as well on that point in the U.K. and maybe how you're seeing your clients using technology to help them improve their numbers, outcomes and so on.

Thanks, Will. I mean I think it's pretty worth noting that we're probably just at the beginning in the technology journey that's going to affect every aspect of the value chain. I mean, for the last few years, a lot of the focus has been on how do we cope with having hundreds of thousands of employers and millions of new customers coming in through auto enrollment, how do we make that efficient, how do we minimize the number of cases that go wrong and need intervention. But I think there's much more to go. So the FCA is currently consulting on wanting its -- the providers that it regulates to be signed up to the pensions dashboard and fully integrated by June next year, which is going to drive modernization across the industry because a lot of pensions are still sitting on very old legacy systems that aren't suited to delivering that kind of data in a real-time way. But also at the front end, as Phil said, there's a lot to be done on engagement. We have a whole generation of people who are really just getting used to the idea that they have a pot of money that they're saving for retirement that they are in control of rather than it being something that's somebody else's responsibility to manage. And while some of the early signs are good, I mean, I actually sat on the group that did the business case for what became Neste. And one of the things that has been raising our rates are very, very much at the low end of what we thought might be possible. So people are willing to engage with pensions, if nudged in the right direction. And also, if you look at during lockdown and the COVID crisis, the levels of contributions did drop, but only about as much as you'd expect for the number of people who were on furlough and being paid to reduce salary. So it's really encouraging that people have stuck at that, but we now need to educate them about how do you manage that money, what is a sense of things do? What's the safe thing to do? How do you get a good return to yourself? And actually, how do you start thinking ahead and paying your future self because as we all know, the earlier you contribute, the bigger the impact it has. But you've got many, many competing pressures in terms of savings for housing, in many cases, with inflation at a very, very high level, people having to cope with just the daily cost of living. So there's a lot further to go. And there's a big role to be played particularly in automation of advice, automation of education to help people pick up on that. And I think we're going to see radical change over the next 4 to 5 years.

Thanks, Jason. I think we've obviously covered the U.K. It's probably worth now going to Australian colleagues to get their view. So maybe Vas, if I come to you. Obviously, how is Mine Super using technology and maybe how some of your peers as well, I think, to help improve outcomes? I'm sure it's maybe slightly different here in the U.K. given where you guys are now?

Thanks, Will, and hopefully, you can hear me as well. Probably full disclosure, we are an SS&C client. So SS&C supports us to deliver outcomes for our members, which is fantastic. But probably just a general observation and building on kind of Jason and Phil's comments, probably the major differentiation in the Australian pension sector from the U.K. is that we've largely solved what we describe as the first order issues, which is adequacy, coverage, et cetera, with probably the new frontier being competitiveness and how the regulator and the government views, how the pension sector where it should be going. Do we end up with a sovereign wealth fund? Do we have a number of an old lease style structure? And I think we're still grappling with that right now of what is the right level of competitive tension. What that has done is though either a cause of bifurcation of the industry between funds that are growing and funds that are not. And the funds that are growing, we're actually utilizing technology to win share and significantly improve member experience, which is creating increased expectations and improving competitiveness for some of the funds that aren't growing. There's probably 3 or 4 meaningful ways in which technology is changing the landscape for members. Probably the first is actually reducing the cost of the engagement model generally, which will translate to just lower fees, which I think is a very positive thing. The deduplication of accounts is fantastic, which kind of eliminates the erosion unnecessary costs or dupe of the insurance, which is another benefit for members. Members just have a better understanding of their pensions, how they're invested and similarly, the insurance arrangements attached to them. And it's been particularly helpful in relation to the provision of financial advice. I suspect in the U.K., which Phil and Jason's views, we have had, I think, the decoupling of banking and wealth and high regulation has resulted in higher cost of financial advice, and we've seen a significant exit of advisers in the last 2 years. And that means that pension fund is going to step into the space and use technology to guide members to the right outcomes. So I think overall balance, you'd probably see the technology has made a very important difference in the context of members. I don't know, Seamus, if you had any other comments to build on that.

Yes. Thank you, Vas. Look, I certainly concur what we've seen in Australia is really technology driving transaction efficiency and cost, and that's been to the benefit. I think digital engagement is the next frontier, and that's growing. And that can really go in 2 directions, one very positive and one less. So in terms of the dangers, what we're seeing is it's driving a very short-term level of transaction engagement or the transactionalization of superannuation, which is a multi-decade savings program for retirement. And so obviously, whilst you want the consumer to understand that they have a savings program that they will benefit by contributing through their lifetime in a consistent manner to that program, treating it as we treat transactional finance products like banking and consumer products that has been a use of technology and perhaps has been driven behavioral -- transactional behavior that has been less beneficial. I think the other aspect, though, is technology is bridging the gap between the highest step up to advice. And so obviously, where you go wise and novices in terms of their financial future and they sort of savings they do need guides and signposts along the way, and it's a big leap for them to go from that position to a fully engagement is really the bridge for that in terms of calculators potentially robo advice and sources of information. So I think their elements. The last element that for me is an investment professional is some of the things that decentralized finance or defi offer, which is really looking at cutting out intermediaries out of the financial system and really, really cutting transactional costs in the markets, and I think that's really exciting next frontier.

Yes, thanks. Thanks, Seamus and Vasyl. It's really interesting. I think maybe I'll come to you, Phil, just to maybe talk a bit about what Vas and Seamus have kind of mentioned there from looking at where we are in the U.K. here.

Yes. Happy to. I thought the comments Vas was making about that new frontier like sort of locking down the adequacy and engagement parts, but then saying, well, with a consolidation sort of mindset and competition being a focus for funds. That's something that started, I think, in the U.K., but we're going to see accelerate. We've got a set of authorized providers. . But scale is key both in terms of reducing our fixed cost, but also in creating the capacity to invest in some of these new technologies. So I think being a going concern and having a sort of a growth position and being able to demonstrate that will be really important. So I think from our point of view, we expect consolidation to continue. We're seeing it sort of at the kind of auto enrollment end of the market, but I suspect there'll be fewer players across the board in the U.K. Master Trust market over the coming years. And the other thing that really stuck out for me is this point on financial advice and guidance. We've seen that hugely. We have got an advice gap in the U.K. financial advice typically has been the preserve of higher net worth individuals. And depending on the quality, they can extract value from that. But many of our members, hundreds of thousands of our members might not have that complicated financial affairs. However, their pension balance is probably the largest part of money they've ever had. And they are definitely looking for affordable advice and guidance because making a decision about how to access, when to crystallize assets, how to draw down in either a tax-efficient manner or in a way that maximizes their income is a decision most people are not used to making. And they'll have a combination, of course, of universal state pension in the U.K. as well as potentially DB assets. So it's not the DC pot necessarily is needed for managing longevity and inflation in the -- over the long term. So I think that whole gap will change. We've seen that evolving, certainly at the Mercer Master Trust. We've been deploying technology to help with that using automated and digital advice services to drastically reduce cost for members, but give them access to regulated advice so they can get help when they need to when it comes to retirement planning. So I thought that point was really interesting for me, and I'm sure we will see plenty more innovation on that in that whole area across the U.K. market. But for that, we definitely need scale. So that means definitely continued consolidation.

Yes. Yes, exactly, Phil. I think you're right. We've already seen the consolidation in U.K. And I think as you said, it's probably likely to continue. Jason, would you like to just -- as well can you comment on what sort of Vas and Seamus has discussed in Australia?

Absolutely. And I think the competitive tension in the U.K. is a cause for concern in the longer term. I think at the moment, it's going through an earlier phase that perhaps reflects the fact that there's a long history of own trust or single trust pensions in the U.K. as well. So as the expectations on trustees ratchet up as the pensions regulator sort of asked them to look harder at can we really deliver performance value for money, the sort of member protection that we need to deliver. We're seeing a phase where a lot of single trusts are starting to look at, well, should we fold ourselves into a Master Trust. So we're seeing very rapid growth in Master Trust at the moment. And a lot of players have entered the market in the expectation that if they capture a share of the market now, it will be very, very sticky, probably only moving every 10 years or so as opposed to the current pattern, which is it's retendering around once every 3 years and moving around once every 5. So we're going through that phase of the single trust becoming Master Trust. I think that will then be followed by a phase in which the Master Trust sort of failed to reach sustainable scale will probably merge into each other. And in parallel, there's a process beginning in DB of both sort of derisking through bulk annuities and also some DB consolidators to be set up, and that runs in parallel. I mean I think the other things we need to consider are there efficiencies. So the sort of decentralized finance, the sort of simplification of how we manage and run contributions and investments is interesting. And I think there's a question to be asked about whether a model like SuperStream in Australia would deliver benefit in the U.K. Clearly, having a single point of interface into the pension system would be a big boon for a lot of employers who've been perhaps struggling with sort of setting up pensions for the first time. Although the fact that in the U.K. essentially, the employer chooses the pension rather than you carrying potentially a pension between different employers sort of changes the dynamic a little bit. It's not quite so complicated for an employer who probably doesn't have to pay into multiple different schemes. That said, I think there's definitely something to be looked at as we see the other end of that problem emerged, which is as people move jobs, they tend to end up with fragmented pension pots. So there's a small pots working group that is looking at what the solution is for that. They seem to be coming down quite strongly on the side of what they call pot follows member, which means when you change jobs to an employer who uses a different pension scheme, whatever pots you've built up should default sort of being transferred after you, which obviously has some transactional costs, but at least means that you're not fragmenting that money and you are gaining the sort of benefits of scale economies on your transactions within the pension. Interestingly, a couple of other countries have tried different models. EY helped with the Norwegian solution, which had a very, very complicated solution that allowed members to either have pots follow them around, have their choice of pension follow them around or anything in between. And I have some colleagues who say they have quite a lot more gray hair as a result of that. So the answer is probably to go one way or the other, but not try to do both at once. And then just to come back on that advice gap, we have a huge advice gap in the U.K. Actually, although the regulations increased, the financial advice market has grown, but it's grown primarily by serving the wealthier end of the market. So yes, many advisers wouldn't look at someone who doesn't have at least sort of GBP 100,000 to invest. I mean, ironically, there are probably quite a lot of families out there who if they did bring all their pensions together would have over GBP 100,000 and might be of more interest to advisers. But at the same time, around half the population, particularly skewed towards the less wealthy end, don't see financial advice as being something for them. So it's a real challenge as to how do we reach them and how do we give them the support they need to make what are actually at one level quite complex decisions, even though in many cases, the best answer is pay more in, put it in a cheap mix of asset classes and then leave it well alone for as long as you possibly can. But communicating that message and holding people's hands through difficult times, helping them make the choices of where is the right way to balance the money they have. We've got a long way to go on that. And I think learning from Australia and other markets is really important in that context.

Good point, Jason. And Will, if I can jump in, I know we talked last week, well, about the -- looking at the Australian market and what changes your initiatives. I was talking to you about in terms of what the U.K. DC market could do to improve member outcomes. Jason rightly mentioned SuperStream. So building on top of what Vasyl and Seamus commented on in terms of tech-driven improvements, I think there's probably 3 big changes that we've seen here in the Australian market that I think the U.K. could benefit from. And to your point, Jason, SuperStream. So for those of you who aren't -- who are in the U.K. are not familiar with it, SuperStream, a system developed here by our Australian tax office, and it basically requires employers to send all superannuation payments and employee information electronically. So using SuperStream has been mandatory since 2016, but it means all pension contributions are paid for electronically and has a consistent data format. So that means employers can make all their contributions in a single transaction, even if they're going to multiple Super funds, contributions and rollovers can be processed faster and more efficiently with fewer errors. And then people can more reliably link their superannuation, reducing like lost accounts and unclaimed moneys. So for the U.K., I think SuperStream would really simplify admin for the small funds in particular, well aware, directly, it's been around for a long time. But having one universal digital data format really helps everyone. I think that would be one way to submit contributions far goes off and likely simpler. A second point, Will, that we talked about last week was the reform. So in Australia, recently, we've had the Australian government to implement a series of reforms to our superannuation industry, and they recall the your future, YourSuper reforms. And that was all about making our industry more efficient, transparent and accountable. And the 4 key elements of that were, first of all, pension savings accounts will follow members when they change jobs, and that's simply going to reduce the incidence of members having multiple unnecessary accounts, and we call that stapling. So YourSuper account is stapled to you, to your working career. The second one was that funds are subject to an annual performance test by a regulator, APRA. So funds that fail have to notify their members. And if they fail for 2 consecutive years, they're unable to accept new members. Quite penal. There are others. Another one is the ATO, the tax office has a new interactive online. They call it the YourSuper Comparison Tool. And that's saying that all consumers where you can compare different Super providers for yourself, and that will give you a good investment -- independent perspective of investment performance as well as sort of admin fee charged currently. And the third one, Will, if I can, quickly, just pension fund consolidation. So Vas mentioned it earlier. Look, regular -- over-regulators told any Australian Super funds that's less than $10 billion in size, you essentially need to have greater scale to offer your members better access to higher returns and for a cheaper price. So if you're less than $10 billion, regulators basically coming after you now to merge. If you're above AUD 50 billion, then you're safe for now, and those that are between $10 billion and $50 billion are frantically trying to consolidate and merge before the regulator knocks on the door and forces it to happen. So I think, Will, despite there being 2 very developed markets, I think there are 3 different ways on top of what we've been covered around the tech-driven change, where U.K. could benefit.

Yes. Thanks, John. I think obviously you've touched on 3 really key regulatory change -- key changes anyway that are proven in the market. And maybe we've touched a bit on value for money, Jason. But I guess it's not quite near the performance testing that's going on in Australia, but do you think that's part of where we're heading in the U.K.?

I think so. I mean the topic of value for money is 1 that's debated quite a lot, and it's a tricky one. Because historically here it has tended to come down to cheapest funds. But I think the -- there are moves now in terms of looking at a slightly more subtle measure. So really, it's getting closer to thinking about that efficient frontier of what's going to give you the best return given the level of risk that you're taking. I personally think actually we need to have a much more mature conversation about risk as well because when we mention risk, what we tend to mean in the U.K. is volatility risk, which is largely there because there's a bit of -- there's quite a lot of evidence that consumers tend to panic when they see volatility in their investments and may sell out at the bottom of the market. Actually, I think there's a big education piece around saying, well, look, depending on your timeframe, different types of risk dominate. You may actually be better off accepting volatility if it is correlated with higher growth in the long term and you don't need to catch in the funds anytime soon. And -- but at the same time, if you're talking about money that's invested for the long term, being exposed too much to inflation risk or to investments that are unlikely to beat inflation isn't really even fair to call it a risk, it's an issue. It's going to erode the value of your money over time, and we're not having that conversation with customers today. And I think particularly for people in or approaching retirement, that level of sophistication isn't there because someone who returns with a large DC pot today will have money that they may not be spending for 30 or 40 years. And if they're putting that in the traditional low volatility, bonds and cash type mix that we've been lifestyling people into for many years, they're going to miss out on growth that might afford them a much better lifestyle and retirement. So I think there's really something about how do we improve that conversation around risk and how do we help people adapt to that. And that goes hand-in-hand with value for money. But then underlying it, I think John is exactly right in saying, well, anything we can do to take cost out of the system to standardize the interfaces, to standardize the way money is communicated, to help people consolidate and avoid the frictional cost of fees on small pots eroding their money. All of those things help in the longer run as well. So absolutely, I think learning from what Australia has done, but adapting it to the specifics of the U.K. market that is set up slightly differently is going to be a key thing for regulators and providers to do over the next decade or so.

Can I just jump in there Will. I think as Jason raises a couple of really important points. So I think on the scale and small parts. Obviously, for members, there's a challenge there. We don't want fees eroding at those small parts, especially if they've got fixed pound-based fees on any elements of their provision. And -- but equally, there's a wider point about the ability of the industry to invest. So I think we all know that storing up deferred and small part is a bit of a challenge, but the focus in the market has been a bit elsewhere and just winning new business, making sure that as that big trust to trust process takes place that we are focused on that, and that's a good source of growth for certainly some Master Trust providers. So I think we kind of know we've got a small pots issue when there's -- we're looking at it. I don't feel like it's probably risen to the top of the agenda. But if we don't solve that, then actually, the profitability and the capacity to invest in new technologies, in new solutions to support members, in new investment asset classes using that head space to maybe invest in alternative assets becomes lost. So that will feed into value for money. And I think increasingly, trustees are acutely aware of for every pound they're spending, could they be spending that better for a member's benefit? So I think all these things are related. And we will get a chance, hopefully, to really leverage change that's coming. So we obviously have dashboards coming to the U.K. And for U.K. listeners on the call today, we might be thinking, gosh, we've been talking about that for years, and we have indeed. And hopefully, next year, we'll be operational with that. But to be honest, if we're slow on start, the dashboards prototypes that we're involved with as alpha testers are pretty basic. And just having the search functionality for members to hopefully look at their pot won't really help them necessarily do more retirement planning, consolidation virtually or physically. So I think there's still an impetus on providers to then say, okay, well, multiple pots is an issue, both for the provider in terms of profitability and capacity to invest, for the individual in terms of retirement planning and efficiency of their portfolio. How do we use systems like the dashboard or other technologies to actually drive an improved member outcomes? So I'm hopeful that that's the focus of many pension providers in the U.K., that we don't just focus on the compliance of what's needed, but actually, how do we move things forward to improve their outcomes.

Yes. Thanks, Phil. That's really -- as you're right, it's all linked to venture money as you say, a lot of those things, and all comes in. And the dashboards, obviously is, yes, very exciting for some. But yes, it's probably the starting one which is the way you're thinking about it. I mean, just going back to what Jason was talking about with, I suppose, the value of money and John, on the performance testing. I mean Vas and Seamus, you've obviously been through that recently as well and pass through the testing. So maybe just to get your thoughts on that as well and maybe what the U.K. could learn from some of the rigorous testing that goes on for yourselves?

Before I make a general comment, Will, and then hand to Seamus. He's probably a little qualified to answer the question that I am. I think testing and benchmarking of products is a good thing, particularly those are in the market. My view is that the implementation of our testing regime in this particular jurisdiction has probably not -- probably met the objectives of the regime in and of itself, and the regulator and the government are continuing to refine it, and they should over a number of years. So I think generally, the concepts are quite good. And then -- and it will prevent perverse outcomes with trustees, not necessarily constructing portfolios which risk up members. But that being said, though, I think the implementation has been problematic in our particular jurisdiction. I think Seamus, I think that's careful enough characterization of the legislative regime. I know you have a more technical view on this from an investment perspective?

Yes. I mean, look, testing in the finance space is always challenging yet important. And everyone in Australia is unified in their support for a regime that allows for accountability and comparability. I think where the wheels fall off a little bit is in the detail. And just to give a very short solid history of where we came from. In the early stages, we had a proliferation of Master Trust corporates and industry funds and everyone in between filing into the superannuation system. Some of the outcomes for consumers were demonstrably poor, high-fee products, unsuitable products for service outcomes. And this came to a head along with the broader finance community and the Royal Commission and a number of other events that really made it almost a necessity for a government to more acutely regulate an environment for consumer outcomes. And so that's probably a danger for an early-stage system I would flag. I think having said that, the testing straddle 2 areas. One was fees, and we set up a standardized framework to define fees for the first time. This seems extraordinary. But you couldn't look at product speed load and have any sense of comparability as to how much it truly cost because every provider was free to define fees in their own map when Australia brought in 1997. It was an enormously frictional process with the industry. But having achieved it, it has allowed consistent comparability of fees across products in the industry for the first time, and fees have dramatically come down, as we've seen that transparency. So that outcome has been terrific. My perspective is that the U.K. has not really seen some of the fee issues that Australia has had in the past. And I think that's to applaud the way that the U.K. has started auto enrollment right from the start with a very free conscious mindset. The second aspect has been less successful arguably and more challenging, which is how do you compare investment performance. Now in order to enforce comparability and consumer understanding, your necessity need to provide simplicity across products and doing that with investments that sit across vastly different investment structures is enormously challenging, and that comparability has come at the cost of accuracy and informational usefulness and has essentially imposed a false comparability on the industry. But it has given a framework to the industry to manage to. It has given the consumers at least a benchmark that they can utilize, and that benchmark has been publicly available, and it's come with very, very strong regulatory sanctions for those funds that don't pass that strategy. But some of the issues are that, that performance benchmark does not look at the product strategy. So one of the big problems in the Australian system for many years has been young members with a very long time horizon and a very high risk appetite being invested in very low growth products. And those strategies are not accountable under the test regime. So we would suggest that potentially looking at a trustee strategy is arguably more impactful than nearly looking at how they choose to implement that strategy in terms of what managers they select or what asset classes and how they implement those. And the second aspect is obviously the time horizon. It was introduced as a retrospective test, didn't give trustees the opportunity to manage that or to understand their obligations. And so essentially, it really punished trustees to invest in asset classes to diversify their risk. But those asset classes were not covered in the relatively simple benchmark nominated by the regular. So the devil is in the detail. However, having said that, we do feel supportive of a comparability of accountability. And we think that the system is better for it. But obviously, it's got some significant floors that will continue to be worked through.

Yes. Thanks, Seamus. I think obviously, good things for the end consumer with what's happened. But yes, as you say, it's a bit of a balance in terms of how you can really assess those products and make them comparable. But yes, I think we've been, I guess, as you say, a bit slightly different in the U.K. with the large cap that came in with auto enrollment, which kept costs at a fairly low level for the Master Trust and the like. We've had a few questions from the audience, which we've answered a bit throughout. But just to make the point, you can ask questions to all those listening in the Q&A. So please do put questions in, and we'll later answer them as we get to that. Maybe we'll start with one as we kind of go through, we'll cover this now, if that's okay, Vasyl. I'll come to you with this question, which is about should schemes be doing more for their members with additional support for those in accumulation?

Thanks, Will. I think the short answer is yes. I think the problem is though that most of the money, at least in our particular sector, right now is in the accumulation phase. So our fund, as an example, has close to 90% of its members. And probably, I think, about 80% of its fund in the accumulation phase. So most of the effort and time in relation to product, design development is focused or trustee obligations to focus on the accumulation phase, and it's more highly regulated, particularly with the Mine Super regime. And that is changing, though. So I think as we now have a new biz legislation kind of as part of that suite that was introduced that John was talking about earlier in relation to development of retirement income covenant. So now our jurisdiction has been twin with the idea of all the supplying of Mine Super accumulation regime to a decumulation phase, where you have to have a defined strategy, you have to -- your default into a product with income stream. You need 2 cap fees, et cetera, et cetera. So I think our legislative framework is moving towards that. And yes, I do agree. We should do more for res in retirement. I think the only problem is that the way that the Super sector is or how people interact with the superannuation is that, well, I've been saving. I haven't had access to it for X number of years. And therefore, it's my money, and I'd like a degree of agency associated with that. So we do have a large number of lump sum withdrawals. And whether or not it's for the Super sector to solve for the broader societal issues. It's probably a separate question. But yes, I am -- my firm view is we should do more in decumulation, and I think the funds in this particular sector are definitely moving down that path.

Yes. Thanks, Vas. Nice. Nice, it's really helpful.

Can I touch on that first on that from a U.K. point of view.

Yes, Phil, if you want to, yes.

Yes. That's something Vas said was fascinating, I think, for a U.K. audience in that we look at and we started off saying, well, look, in Australia, that's more mature markets, Super guarantee guarantees '92, '93, so just more time has elapsed for people to be a massing, yet still the focus on the weight of assets being in accumulation or decumulation. We talk about this a lot in the U.K. That with the removal of compulsory annuitization, there's now freedom for people. But there's the scale and weight of assets aren't necessarily there. And equally, most people retiring today aren't reliant on the DC part to solve their income needs. So there's a balance that providers, I think, at the moment are focused on support, education, guidance, advice, making sure people can navigate the complexities of retirement and that needs to develop and has been the focus. But I think innovation on investment products will follow, but you need the scale of the assets in there. So I think that intersection between institution and retail provision and that whole rollover into drawdown on what Master Trust can provide through an institutionally governed and priced framework will be fascinating to watch. But I'm kind of heartened by the fact that they haven't cracked it necessarily in Australia coming from sort of the opposite end of the spectrum of no annuity market or not much of an annuity market and are starting at the other ends. But the answer must be somewhere in the middle.

That's actually great, which I want to make, Phil, which was the -- in the wake of pensions freedom we did a bit of analysis of sort of what was happening around retirement around the world, and it was absolutely that meat in the middle sense. So countries that had essentially an unregulated retirement market where customers sort of were free to sort of use their retirement funds as they still fit we're looking harder and harder at how do we ensure a guaranteed level of income and countries that have had more or less compulsory annuitization utilization, we're looking at liberalizing and giving people more freedom. And I think the answer probably does lie somewhere in the middle because if you talk to most people, then having some level of income security is very, very important to them. The trouble is they're very, very aware that annuities don't offer the same level of income that they used to. I hesitate to say that they don't offer good value because actually, if you look at how much they pay out relative to how much they pay in, they don't make massive margins, and they do generally pay out about 90%, 95% of what people have paid into them overall. But I think we do need to rethink when the people need to secure that income. Annuities were designed to cover the last 5 or 10 years of your life, and you're buying them when you've got 30 years to go. They're not going to deliver a great income. Actually, do we need to think about retirement as being a much more -- I'd like to talk about breaking it down into kind of human sized chunks. If I look at my parents and my parents in law, they have followed very different paths through their retirement. And I've been able to follow 4 of them because they're divorced and separated. And each of them is on a different path, but they've all had this common pattern that every 4 or 5 years, their circumstances have changed and what they've needed has been different. So how do we help people make a decision that covers them for a period of time that people can get their heads around because people really struggle with decades-long planning and still have enough resources left to come back and make a different decision later on when their circumstances have changed. And I think, again, technology has a huge role to play in that because as we move through this, we're not just balancing what to do with what investment part. You're balancing what to do with your housing wealth. You're balancing what to do with your state pensions, with residual defined benefit for those who have it, with other investments, with other forms of work. I could gather that in Australia, the over 60s and one of the fastest-growing segments in employment as people go into self-employment or a secondary career in addition to what they're doing to take advantage of the fact that they've got the health and there's an opportunity to sort of gain more wealth. There's a whole load of stuff we need to think about there.

Yes. Thanks, Jason.

Perhaps just a parting shot is we need to think about it in terms of different cohorts rather than trying to have a one-size-fits-all solution. Sorry, Will.

Yes. No, no. No, I think it's a great point to finish on. Yes, exactly it's got to be personalized, isn't it, in terms of how we look at it. Thanks for that, Phil, as well as Jason. I think we'll just move on to the main kind of topic, I suppose, around engagement. And we talked a lot about how that's about trying to drive better member outcomes. But Vas, Seamus, I'm interested to know whether you think how do we get the right balance for that engagement from the end numbers without it being detrimental.

Okay. Thanks, Will. I think you unfortunately have 2 competing forces constantly at play. The first is as trustees, we're all trying to engage our members as much as we possibly can in the context of their pension. But we also want to ensure that I don't take too much control as they are prone to making decisions, which are not necessarily in their best interest. That's the nature of being a trustee. You kind of act for and on behalf of the new ones, but you act on behalf of others. And I think we've had discussion previously. We're using the poor analogy of health. You want people to engage in their health care, but you don't want them to engage to the extent where they're second guessing or undermining the recommendations of professional at Google Doctoring effectively. It's quite it can lead to quite poor outcomes. And that is the nuance about being a trustee. And I think the problem is that, that issue is actually exacerbated by technology, not necessarily solve for it because you're creating frictionless processes in the context of important decisions, which are not meant to be frictionless. They are meant to be thought about -- these decisions are meant to be advised or partially advised in the context of a general advice or a personal advice conversation. And what you found with the proliferation of technology, particularly in this jurisdiction over the last 6 or 7 years, the advent of calculated, single-touch consolidation has resulted in potentially perverse outcomes just because you can make an investment switch doesn't mean you should. And that's the conundrum. How do you employ members to engage with their future sales, but not necessarily engage daily with their actual pension balances to the extent where they start day trading in? And I think -- so from our perspective, it is trying to find the right balance. We do make sure that with our members are making decisions, quite important decisions around selecting our investment strategy or alternatively in the decumulation phase, actually making on some withdrawal or setting up allocated pension. We do make sure they're looking to make these -- we want to make it as easy as possible for them, but we want to make sure that decision is well thought through rather than just a single click, which could have hundreds of thousands of dollars of impact over the longer term. I don't know, Seamus, if you wanted to add on to that.

I would just echo that the finance industry is still is not a strong communicator. It's very jargonistic and certainly our members who are predominantly in the blue collar sector find it difficult to engage with information around the pension process. And it's exacerbated by 2 simultaneous forces, where we're trying to build engagement for the purposes of driving increased contributions for better long-term outcomes and also creating a sense of satisfaction that their mandatory contributions are being well looked after. But on the flip side of that is, as Vas said, we don't necessarily want that to translate into action. And unfortunately, the human condition is that once you are made aware of something, you tend to want to act on that awareness and make decisions. And we have seen recently in COVID, we have seen with the government tinkering with people's ability to access their pension earlier in life through the early release program, is that some of those decisions will have lasting ramifications in terms of aggressively derisking into a recovery in COVID or removing a large portion of their nascent superannuation savings pot when they were given the green light and the encouragement to do so during COVID and in many cases, not in adherence to the spirit of hardship that was meant to drive that. That is clearly systemically not a good outcome. So I think the engagement story is nuanced. It's important. It's particularly important as you move into de-cumulation where people's ability to understand their risk tolerance and reward and what they're looking for in a post retirement lifestyle and outcomes is really important for providers like us and like others in both the U.K. and Australia because it tends to be quite generic at the accumulation stage and what we start to see is bifurcation in de-cumulation, where engagement does become important.

It does. Just in summary, Will, it's pension engagement is not insulated from the Goldilocks problem. And I think we all have that as kind of advisers and civilly as trustee, it's just wildly problematic.

Yes. Thanks, Vas and Seamus. I mean, John, did you want to also add anything on that as well before I maybe come to Phil in the U.K.?

Look, I just think that innovation is generally quite stifled here in Australia. The regulator has really driven so much change at all energy and budget spend is really focused on rate change and the fear of reg risk. So I think it's stifling a lot of potential change. And I know, Will, there's another question that's come in on the topic of annuities as well. If I could just quickly, can I touch on that?

Yes.

So look, the cost of capital is quite crippling, both here and in the U.K. And in a similar vein, I think the decumulation phase products on offer at the moment in Australia is quite limited. I know there's a little bit of innovation. We even have equity release -- home equity released products available to try and supplement liquidity issues that new pensioners run into and on top of the Neste that they have. But generally, the immediate and deferred annuities that are on offer are they're pretty few and far between. I just think the providers find the cost of capital too much and has not really been any major driver. And to Vas' point earlier, I couldn't agree more. The whole focus on the MySuper product offering, and apologies for this in the U.K., if you're not familiar with that. But the default Australian superannuation product with the MySuper product, I think I completely agree with Vas. It's heading to a point where we're going to have a MyPension product where funds will have put a lot of thought into and strategy around charges and some innovation around the products there. Okay, Will?

Yes. Thanks, John. Just to I think, Seamus.

Yes. I just wanted to add, we've done a lot of work historically. Our fund, it has a reasonably high proportion in the accumulation for the industry. And we've given a lot of consideration historically on longevity products and how do you give people a backstop that allows them to spend their accumulated wealth in some security from the fear of running out of money. And it is challenging. It does require the superannuation industry to work very closely with the insurance industry to hedge mortality risk. The cost of providing guarantees around investment outcomes tend to be prohibitive and the balance sheet to support that cost of capital has been touched on. So I think what we discovered is that you need some form of deep deferred investment-linked mortality product that you can then staple with an account-based a fixed period account-based pension that essentially draws down income to 0. Now the challenge with that is as of any pooling product, where you're pooling mortality risk in particular, it's really a scale game. It's very vulnerable to adverse selection in the pools and something we're particularly aware of with the nature of our membership. And so it's one that, arguably, there's probably an industry solution rather than individual product providers because you need scale for pooling, you need substantial backing. And in order to get the -- essentially the smoothing of the outcomes across the pool, you need really good pool design and scale outcomes and the partnership of superannuations by pension providers and insurers with mortality experience. So it's really important work. It's extremely complex. But I think in Australia through the retirement income covenant, we'll start to get through.

Yes. Thanks. Thanks, Seamus and John. We've just got a couple more minutes. I just want to quickly touch on contribution rates. Obviously, different here in the U.K. to Australia, and different levels and increasing. I mean does Jason or Phil, do you want to comment on here from the U.K. just quickly, and maybe then we'd just go to Vas and Seamus with both of those?

Yes. I think very quickly, most people in the U.K. would -- sorry, most industry commentators in the U.K. would probably say that contribution rates need to rise. Probably less so for people who are starting earlier, which comes back to that cohort question. And I think when we discuss this in preparing for the meeting, I think the feedback from the Australian side was the sort of 12%, 12.5% that Australia is heading towards is probably aimed at helping people who are starting later, so the solution may well be lower contributions but starting earlier. And I think that, again, is something that points towards trying to think about this in terms of age bands going through the process because everyone has a different economic environment to work in and actually a different contribution history to work with.

Yes, I think it's a great point, Jason. I mean, Vas, Seamus or John, any one want to just quickly on the Australian side before we close on that?

I think it's, to Jason's earlier point, it's which cohort are you solving for. So we obviously have a lot of retirees coming through now who didn't have a minimum contribution of their income of at least 9% for the entirety of their working life. We know from a research perspective that in 75% of retirees, retiree couples and households. Therefore, they pool their -- they tend to pool their contributions. We have a safety net of an edge pension in this particular kind of jurisdiction as well. Obviously, as a trustee, I think more contributions are better. That's what we need. However, it'd be interesting to solve if some of the modeling will start to focus on the superannuation entry in industry now and starting to work as an 18 or a 19-year-old and what that looks like over that 40-year period because I think most of the focus and research and John's right onto it tends to center around the retirees who have an adequate Super purely because of the fact that they started to contribute their contributing less and started contributing later. So it'd be interesting to see that research hopefully focus shift over the next 10 to 15 years, I would say.

Thanks, Vas. I think we're out of time when we're running. So just to say thank you to all my panelists from Australia and the U.K. It's been a really interesting discussion, and thank you all for joining from various parts of the world. It's been a great webinar. And I'm sorry, we haven't got to all your questions. We will come back to you directly with responses. And we'll also be sending you a copy of the webinar so you can view it at your own time. And obviously, feel free to get in touch with me or any of the panelists for any additional comments or questions that you may have. We'd be delighted to help you. So thank you once again, and have a good rest of the day or evening, wherever you are.