Longevity risk will prove costly: Actuaries Institute
The Federal Government has been urged to lift the pension age and incentivise income stream superannuation options to lessen the economic burden left by the baby boomer generation.
In a pre-Budget submission, the Actuaries Institute said structural change was imperative to combating longevity risk and unexpected rises in life expectancy.
The removal of barriers to innovation in the product space, which would allow deferred lifetime annuities (DLA) to become a viable option, needed to be prioritised, according to the institute.
“The current limited range of income products that pool longevity risk, including the unavailability of pure longevity protection in the form of a deferred lifetime annuity (DLA) and other guaranteed retirement income products, is a major consumer issue for the growing number of baby boomers who are retiring each year,” the submission said.
It also called for the Government to incentivise income stream superannuation products to reduce the likelihood of retirees running out of lump sum super and using the pension as a fallback.
“In particular, retirees should be incentivised to protect themselves against their own longevity,” it said.
As a further measure, the institute said the pension age should be further lifted in line with rises in life expectancy.
In addition, legislative barriers preventing older Australians from staying in the workforce should be removed, it said.
Recommended for you
Treasurer Jim Chalmers has handed down his third budget, outlining the government’s macroeconomic forecasts and changes to superannuation.
Online investment adviser and fund manager Stockspot has introduced Stockspot Super, Australia’s first 'ETF only' superannuation product. superannuation product.
ASIC has called on superannuation funds to improve their oversight of advice fee deductions following an investigation of 10 trustees that found $990 million was charged in one year.
With just 30 per cent of Australians knowing their superannuation balance to the nearest $1,000, Findex has emphasised the role of financial advice in addressing the critical super knowledge gap.