Home

The superannuation industry is facing a retirement outcome challenge, which is driving the need to develop products, strategies and solutions that better reflect members’ objectives and preferences.

The Member’s Default Utility Function Version 1 (or MDUFv1) is an open-architecture metric to assist the industry to design retirement outcome solutions.

MDUFv1 was developed by a panel of academics and industry professionals with over 200 years of combined, relevant experience.

The panel determined an appropriate and sensible set of objectives for trustees to assume on behalf of their default fund members, and converted these preferences into a mathematical function – the MDUFv1.

MDUF v1 Research Awards

To promote the use of MDUF v1 in research, the MDUF working group has announced the MDUF v1 Research Awards.

Eligible entrants must undertake research using MDUF v1. The research must be presented at a conference, or made available via the MDUF collaboration websites.

Winners will receive $500.

The conditions of entry can be downloaded here

Entries close on 31 August 2018.

First MDUFv1 Research Awards

On 2 July 2018, the first two MDUF Research Awards were presented to Shang Wu of First State Super and Nick Callil of Willis Towers Watson. The awards were presented at the 26th Colloquium of Pensions and Retirement Research at University of NSW. The awards are sponsored by David Bell and Michael Berry.

Shang Wu’s paper is titled “The Value of Financial Advice for Australian Retirees” and Nick Callil (with co-writers Hadas Danziger and Tom Sneddon) presented a paper titled “Metrics for Comparing Retirement Income Strategies: A Road Test”.

People in photo: Estelle Liu (Mine Super), Shang Wu (First State Super), Nick Callil (Willis Towers Watson), and David Bell (Mine Super).

MDUF resources

Below is a range of resources on MDUFv1. These include presentations, technical papers and Excel-based models.

Item Description Author(s) Status
A short introduction to MDUF v1 A short introductory flyer. David Bell DOWNLOAD RESOURCE
An introduction to MDUF v1 A longer introductory paper which provides broad background on MDUF v1, namely its creation and applications. David Bell, Estelle Liu, Adam Shao DOWNLOAD RESOURCE
Panel biographies Biographies of all panel members. DOWNLOAD RESOURCE
Introductory presentation An introductory presentation which provides broad background on MDUF v1, namely its creation and applications. David Bell, Estelle Liu, Adam Shao DOWNLOAD RESOURCE
Technical paper 1: MDUF v1 – Derivation A paper detailing in steps the derivation of MDUF v1. This paper is reasonably complex. Estelle Liu, Adam Shao, David Bell DOWNLOAD RESOURCE
Technical paper 2: MDUF v1 – Static Models Uses MDUF v1 to compare static retirement product solutions (static solutions involve a set of pre-determined rules applied throughout retirement regardless of situation). This paper accompanies the Excel Model. This paper is reasonably complex. Adam Shao, Estelle Liu, David Bell DOWNLOAD RESOURCE
Technical paper 3: MDUF v1 – Optimal Dynamic Strategies Uses MDUF v1 to derive optimal retirement solutions – candidate products include Allocated pension, life annuities as well as the Age Pension. Alternative measurements (Certainty Equivalent Consumption, Wealth Gap and Extra Annual Return) are calculated. This paper is highly complex. Adam Shao, Estelle Liu, David Bell DOWNLOAD RESOURCE
Excel model This model simulates outcomes and estimates utility for four different static retirement outcome solutions. Longevity and investment outcomes are modelled stochastically and the Age Pension is incorporated. This model is reasonably complex. Estelle Liu, Adam Shao, David Bell DOWNLOAD RESOURCE
Working paper This paper is a document of record for MDUF v1. It records background and objectives of the project and then works through a proposed design solutions for MDUF v1. This paper captures the essence of a number of important debates amongst the Panel. A worked case study (the same as that presented in Technical Paper 3) is included. This paper is maintained in a working paper format and so is not ‘polished’. Estelle Liu, Adam Shao, David Bell DOWNLOAD RESOURCE
MDUF v1 – Questions and Answers A large collection of questions and answers regarding MDUF v1. David Bell, Estelle Liu, Adam Shao DOWNLOAD RESOURCE
MDUF Technical Note – Static Model Calculator This paper provides technical explanation of the measures and calculation in the excel static model calculator. It should be read in conjunction with the excel model. David Bell, Estelle Liu, Adam Shao DOWNLOAD RESOURCE
Static Model Calculator Static Model Calculator DOWNLOAD RESOURCE

For any queries on the material contained within, please contact the MDUF team at: mduf@mine.com.au