Consultation critical in improving retirement

15-Nov-2017

By Megan Tran

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Further consultation was crucial to ensuring superannuation fund members were deploying their savings in the most effective way for the retirement phase of super, according to Revenue and Financial Services Minister Kelly O’Dwyer.

Addressing the Financial Services Council’s 2017 Retirement Income Products Conference in Sydney yesterday, O’Dwyer said the super system was currently responsible for $2.3 trillion of assets, a 1500 per cent increase from when the social policy began in 1992.

“We need to ensure the foundations of the system are built solely with members' interests in mind so that it can deliver on its promise of providing income in retirement for hardworking Australians,” she said.

She said while the Australian super system was world class, the retirement phase of the system had not evolved to its full potential, as identified in the Cooper review and David Murray's Financial System Inquiry.

Retirees came with different needs and preferences and an effective market would provide a comprehensive selection of products to meet those requirements, she said.

“The fact is that the vast majority of Australia's pension assets — at least 94 per cent — are in account-based pensions,” she said.

“While these pensions provide flexibility, they offer limited protection against longevity and other risks.”

The current system was not managing the most fundamental hazard in retirement, longevity risk, and with Australia facing the economic and social challenges of an ageing population, it was essential new measures were put in place, she said.

“The government is encouraging trustees to assist their members by designing and offering appropriate retirement income solutions,” she said.

“And right now I am working closely with my colleague, Social Services Minister Christian Porter, on the social security treatment of these products.”

She added the removal of tax barriers for innovative retirement income stream products, which came into effect on 1 July, was an essential first step to help trustees offer comprehensive income products for retirement to their members.

“Ultimately we want to give future retirees more choice, greater peace of mind and the opportunity to improve their standard of living in retirement,” she said.

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