Member’s Default Utility Function (MDUF)

AIST is a proud custodian of version 1 of the Member’s Default Utility Function (MDUF).

The Member’s Default Utility Function is an open-architecture metric which was developed by a panel of academics and industry professionals to assist the industry in providing retirement outcome modelling. The panel has over 200 years of combined relevant experience. The panel considered the question “what is a sensible set of preferences to assume for default fund members in retirement?” It then converted these preferences into a metric which has many applications including the design of post-retirement strategies. This metric is known as MDUF v1.

Below you will find a range of resources, including the Excel model, which are now available to download. 

Item

Description

Author(s)

Status

A short introduction to MDUF v1

A short introductory flyer.

David Bell

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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

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Panel biographies

Biographies of all panel members.

-

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Introductory presentation

An introductory presentation which provides broad background on MDUF v1, namely its creation and applications.

David Bell, Estelle Liu, Adam Shao

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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

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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

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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

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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

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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

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MDUF v1 – Questions and Answers

A large collection of questions and answers regarding MDUF v1.

David Bell, Estelle Liu, Adam Shao

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