Though self-managed super funds (SMSFs) may currently excel when it comes to providing an income stream during retirement, the development of viable post-retirement alternatives is set to become a key area of focus for all superannuation providers, according to David Lees, General Manager – Super and Investments for the BT Financial Group.
"As an industry, I think we've focused very heavily – especially in the last decade – on the accumulation side of the (retirement savings) system, and I think the next big area for the industry to focus on, the next big area for Government to focus on, is fundamentally around the retirement part of that retirement savings system," he said.
"It's come out of the global financial crisis, because we've seen people getting into that retirement red zone, not wanting to take as much risk and wanting to try and deleverage some of that risk."
Particularly concerned about the retirement red zone – those 10 years pre- and post-retirement – Lees said that a lot of current product sets were largely asset-based, and therefore still quite exposed to market variations.
"What we've seen people do is really start to get to grips with this concept of a stream," he said. "So when they're working, it's almost like a stream – there's income coming in and you can spend it, and when we talk to them, they all see retirement as being like a bucket."
"You have a bucket of money and that's it," Lees continued. "And when they see the GFC, that bucket was halved in one blow, so they're very very conscious around how to manage that, through what type of product and what kind of income stream they can get."
According to Lees, retirees are looking for something like an overlay, if not a full layer, on top of the Age Pension.
"Something that's far more acceptable to their standard of living," he said. "And that's what the industry's responding to and obviously we see this as a huge opportunity within BT and we're responding to it as well."
