Financial advisers may become key facilitators in the delivery of Comprehensive Income Products for Retirement (CIPRs) under the Government's proposed new MyRetirement regime.
The Minister for Revenue and Financial Services, Kelly O'Dwyer has released the Treasury discussion paper intended to underpin development of the so-called "MyRetirment" regime, which points to superannuation funds providing the major delivery mechanism backed by product providers such as insurers.
Outlining the type of environment within which the regime would operate, the discussion paper said that as well as superannuation funds delivering MyRetirement products, as is currently the case, trustees and other product providers such as life insurers could also create new retirement income products that are tailored to particular member segments or individuals, rather than to the majority of the membership.
"These products could be offered via personal financial advice (including through robo-advice) where the adviser is required to consider the individual's circumstances and needs," it said.
"Individuals could also purchase these products via direct channels. If these products are certified to meet the proposed minimum product requirements of a CIPR, it may be appropriate to allow a label to be attached indicating that the product ‘meets the minimum product requirements of a CIPR'," the discussion paper said.
Announcing the release of the discussion paper, O'Dwyer said the creation of MyRetirement products represented an important reform that would help lift the living standards and choices of older Australians.
"There are seldom other reforms that offer such large potential increases in income, without a cost to taxpayers," she said.
"The potential gains to retirees, the economy and taxpayers from the introduction of MyRetirement products are significant," O'Dwyer said. "For retirees, the Murray Inquiry noted that incomes from more innovative retirement income products could be 15 to 30 per cent higher than those from the current typical strategy of drawing the minimum amount from an account-based pension. MyRetirement products would also provide security of income for life — often at a time people feel most vulnerable."
She said the Government would facilitate trustees offering MyRetirement products to provide an anchor to help guide individuals in their retirement income decision-making.
"Importantly, individuals won't be forced to take up these products. They will simply have a broader range of choices in how they want to support themselves in their retirement," the minister said.