Call for retirement income adequacy index
Calls for the Government to encourage a move away from superannuation lump sums and towards income streams have been reinforced by the roundtable conducted by Money Management's sister publication, Super Review.
The roundtable, conducted in conjunction with a Post-Retirement and Ageing Forum, supported the development of an industry and Government-endorsed retirement incomes adequacy index, with the chair of finance and superannuation at the University of Technology, Sydney, Professor Susan Thorpe saying there needed to be a shift away from lump sum framing of retirement incomes.
As well, Australian Institute of Superannuation Trustees (AIST) senior policy advisor, Karen Volpato, said she believed Australia's compulsory superannuation system had matured to a point where there needed to be a commonly-agreed definition of what is adequate.
"There are complications and there are different ways of looking at it, and there are actuarial calculations about longevity and how much you've got, and do you have work breaks and so on but, all that apart, we really do need something to define it," she said.
Volpato said such an index was required in circumstances where there were 11.5 million working Australians and about 18,000 financial planners.
"Therefore, we do need a really simplistic definition of what's enough — and it's agreed — and we use it in our policy debate as well," she said.
Thorpe said she believed there needed to be "a shift away from a lump sum funds management framing of the retirement incomes problem towards an income stream framing of the retirement incomes problem".
"There's lots of research that supports the idea that people are not at all good at translating lump sums into income streams. This has been demonstrated many times over, and yet we continue to communicate with ordinary people in terms of one-sum wealth," she said.
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