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CV Solutions provides services to superannuation funds that enables annual member reports to include sophisticated, yet simple to understand, assessments as to how each individual member is tracking to attain his or her retirement income goal.

The heart of the services provided by CV Solutions is a stochastic engine that estimates retirement income for an individual or family. The estimates incorporate investment volatility and demonstrate the three way trade off between investment risk, level of retirement income and longevity.

This engine is made available to clients in a variety of formats:

1. A “push” reporting service to members: This is a concise and customisable report of the retirement income we estimate each member has a good chance of receiving. The “good chance” outcome is driven by the investment strategy’s risk-return characteristics. These reports are an ideal way to improve engagement with members, especially younger members for whom superannuation is a distant promise.

2. Attribution of changes to retirement estimates: Subsequent reports may utilise updated member data and provide an attribution of the change of the retirement estimate since the previous report. This helps the member take responsibility for making appropriate contributions. And it puts in proper context the impact of investment markets and the fund’s own investment performance.

3. A white-labelled website that allows members access to the same calculator used for retirement adequacy reports; this can also be used by the help desk and advisors. Member can use the website to enter more details regarding their circumstances than are known by the fund. And they can use it to explore “what if” scenarios.

4. A calculation engine in the form of a DLL that can be licenced to organisations wishing to host their own on-line calculators. This allows superfunds to have extensive control over the look and feel of the web site, plus complete control of future customisation and updates.

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5. Consulting on how different investment strategies and retirement income products are likely to deliver sustainable retirement income outcomes. We use the retirement estimation engine to compare outcomes for different retirement income products and strategies. For example:

• Assess glide paths and other investment strategies

• Optimise pre and post retirement investment strategies for retirement incomes

• Assess impact of non-investment parameters on retirement incomes

Investment risk is modelled properly

Our service distinguishes itself from other retirement estimate calculators as it explicitly incorporates investment risk; this is essential if members, and advisors, are to observe the impact of risk. The way we display the results enables members to determine the three way trade-off between

• investment risk,

• quantum of retirement income, and

• longevity.

Why some other calculators are misleading

We believe that retirement income calculators that do not incorporate investment risk can deliver misleading results. These calculators are called deterministic calculators since they do not incorporate risk associated with investments. Deterministic calculators will always show that higher returning strategies deliver better outcomes. But this is one-dimensional: it ignores investment volatility which can have a devastating effect on older members.

We note ASIC’s focus on super funds providing misleading information to members and have recently provided a submission to ASIC including our concerns on this matter. This is available on our website:

Compuational efficiency

Modelling investment risk using traditional techniques such as Monte Carlo simulation is impractically slow if hundreds of thousands of member reports are to be produced. Our engine uses mathematical closed-form techniques that make it very fast, enabling mass production of member reports and fast on-line calculator response times.

Change the dialogue……

Changing the focus from volatile balances to retirement outcome estimates will:

Improve engagement: Members monitor how they are tracking to retirement hence member reports become more relevant. The call centre is empowered with additional tools to assist members.

Put market volatility in perspective: Show the power of “human capital” (i.e. future contributions) to stabilise retirement income estimates. Retirement income replaces the account balance as the member’s key metric to understand their superannuation. The call centre can provide more relevant information to members in times of market volatility.

Encourage appropriate saving: Allows the member, advisor, or call centre to quickly and directly provide fact-based information to answer various “what ifs”, e.g. “what if I save more”, “what if I invest differently”, “what if I consolidate my accounts” and “what if I retire earlier or later”.