Recently released data from the Australian Prudential and Regulation Authority (APRA) shows that the retirement phase of superannuation should be a priority, Challenger’s chairman of retirement income and former Super System Review chairman, Jeremy Cooper, said.
APRA data showing that the average balances of over 1.6 million retired superannuation fund members was now over $250,000 dispelled the myth that retiree super balances were relatively small, he said.
“Many people are now accumulating super balances that will make a meaningful difference to retirement and there’s a need for the super industry to do more to help them spend down their money safely with cash flows that last for life,” Cooper said.
Due to the growth in super balances, he said many funds now managed assets for their retired members alone that ran into tens of billions of dollars, yet these assets were not distinguished from the assets of those still in the working phase of their life, even though retirees faced very different risks.
“The retirement phase of superannuation needs to be enhanced to better meet the needs of members. The retirement income framework is an effective way to achieve this by delivering more clarity and choice for Australian retirees,” Cooper said.
“Government proposals for a retirement income framework, including comprehensive income products for retirement (CIPRs), are a big step forward. They will be an enhancement, not a disruptive change. Retiring members will only get a CIPR if they purposely choose to have one.
“Even then, the product everyone has now, an account-based pension, will remain the major component of most CIPRs.”
