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Lack of post-retirement products failing super
The lack of post-retirement products is letting the superannuation system down, according to BT Financial Group general manager for superannuation, Melinda Howes.
Speaking at Super Review's Future of Super conference today, Howes said solving the post-retirement product issue would make Australia's super system the best in the world.
"If we can improve our post-retirement offers, we can strengthen the overall superannuation system and ensure more Australians are financially secure in retirement," Howes said.
She said the barriers that were stopping product development were:
- Legislative barriers to tax treatment (the Budget has removed this);
- Lack of compulsion — comprehensive income products for retirement (CIPRs) will address a pseudo default or trustee's pick; and
- Complexity and diversity of outcomes for retirees — very different for accumulation phase.
"The first step is to engage with super members in a meaningful way about their super and retirement," Howes said.
"Secondly, as an industry we need to deliver post-retirement products that deal with the main retirement risks; longevity risk and market risk."
She noted that while the government's announcements about CIPRs and changing the tax treatment of deferred annuities were encouraging for product development, no one had tackled how to invest in retirement to avoid sequencing risk.
Howes said there was also a need for offers where members could seamlessly transition from accumulation to post-retirement.
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