Treasury has released a discussion paper on how the superannuation system can provide the needed security and income in retirement.
This discussion paper Retirement Phase of Superannuation increases the focus on the retirement phase by examining:
- Supporting members to navigate the retirement income system
- Supporting funds to deliver better retirement income products and services, and
- Making lifetime income products more accessible.
The number of retirees with a super account is expected to more than doubly over the next 10 years with 2.5 million Australians set to retire but Treasury said they lack access to appropriate products to maximise their super.
Some 84 per cent is held in account-based or allocated pensions, highlighting an opportunity for funds to develop new products. Take up of lifetime income products remains low, it said, and there has been few innovative products come to market.
Treasurer Jim Chalmers said: “While there is recognition of super’s importance in building nest egg savings, there has been less attention on optimising its role in retirement. There’s a clear need for better information, support and well-rounded income products to help retirees make the most of their super.
“Super funds need to do more to understand their members’ retirement needs and provide products and services tailored for their retirement. We also recognise there is a role for government and regulators in creating an environment that supports these changes.
“We want to ensure super delivers on its foundational promise of providing a dignified retirement for more Australians.”
Responding to the paper, Nick Hamilton, CEO at Challenger, said: “Challenger strongly supports progress to develop a retirement income market in Australia that is on par with our world class accumulation savings system.
“We believe that here in Australia, we have the capability and private capital to provide financial security for those in retirement. Developing regulatory settings to support a competitive market will be critical in ensuring the best possible outcome for retirees and future generations.”
Managing director of Vanguard Investments Australia, Daniel Shrimski, commented: “Years of retirement reviews and research have also shown us that no one product is going to suit everyone at retirement. Outcomes are personal to each member, placing greater focus on personal insights, client services, guidance and advice, as highlighted in the discussion paper.
“So, it is also imperative that the remaining advice reforms to increase accessibility and affordability of financial advice progress as soon as possible, ultimately allowing the millions of Australians about to retire in the coming years, access to the guidance and advice they need to improve their retirement outcomes and peace of mind.
“Australia’s superannuation system is strong and evolving to address identified challenges, but there is room for the industry on the whole to improve retirement outcomes and better ensure Australians are retiring confidently.”
Submissions are open until 9 February.
