Machine Learning for Defined Contribution Superannuation
Project level: Honours, Masters, PhD
In a landscape of economic uncertainty and rising inflation, managing retirement savings and wealth has become a pressing challenge in finance. This complexity is amplified by a significant global shift towards Defined Contribution (DC) superannuation plans, particularly prominent in Australia. Under DC plans, individuals shoulder the entire investment risk through both the accumulation (pre-retirement) and decumulation (post-retirement) phases, which together constitute a full-life cycle DC plan extending over potentially 50 years or more.
With Australia being the world's fourth-largest holder of pension fund assets and with over 87% of its 2.77 trillion USD superannuation assets in DC plans, a vast majority of Australian employees and retirees face considerable risk in retirement. Alarmingly, the fear of outliving retirement savings often surpasses the fear of death among many pre-retirees.
Given this background, we offer a range of projects designed to harness the power of machine learning in modelling and managing Defined Contribution superannuation through a stochastic control approach. These projects aim to:
Identify and quantify the diverse risk factors in DC plans, providing insights for suitable risk measures for effective wealth management.
Develop robust, efficient, and reliable investment strategies for both the pre- and post-retirement phases through a stochastic control framework.
Deliver personalised, effective wealth management solutions that cater to individual needs, thus alleviating the fear of outliving retirement savings.
Promote a quantitative understanding of retirement savings among Australian employees and retirees, particularly emphasisng the challenges faced during the decumulation phase.
These projects, suitable for Honours, Master and PhD level students, present students with the opportunity to work at the forefront of financial mathematics, leveraging machine learning methods to enhance the competitiveness of Australian super funds. These endeavors aim to drive significant economic and societal benefits, particularly relevant to Australia, while offering students the chance to make a real-world impact in addressing one of the most challenging issues in today's society.
