The Federal Government has signalled it will be calibrating the social security means testing regime around the development of new retirement income products.
The Minister for Revenue and Financial Services, Kelly O'Dwyer has pointed to the Government's willingness to follow through on retirement income products which she believes will help overcome the limitations inherent in account-based pensions, particularly with respect to longevity risk.
She said that as things currently stood, at least 94 per cent of Australia's pension assets are in account-based pensions.
"There are benefits to account-based pensions, obviously. But they do offer limited protection against longevity risk, and may not deliver high levels of income from a given superannuation balance," O'Dwyer said.
She said that was why the Government was consulting on the development of a better regulatory framework to facilitate the provision of more efficient and innovative retirement income products.
"These products are intended to help manage longevity risk, increase diversity and choice of products, provide individuals with guidance to make complex financial decisions, and, to ensure the retirement income system can withstand the change in Australia's demographics," O'Dwyer said.
The minister said that, importantly, the Government was mindful of the need for social security means testing arrangements to be complementary to the facilitation of these products.