QOA reforms could benefit two million retirees: FSC

Implementing the Quality of Advice Review’s proposals could help two million additional Australians collectively draw down $22.5 billion more from their superannuation by 2040, according to research.

This figure could increase to 3.4 million retirees by 2060, increasing annual drawdowns to $42 billion. 

The research by NMG Consulting, commissioned by the Financial Services Council, found the reforms improved access to financial advice and, in turn, “put in place a plan to spend more of their superannuation with confidence”.

“Despite the benefits of compulsory superannuation, if advice policy settings are left unchanged only a third of retirees will get financial advice over the next decade. A generation of retiring Australians would benefit from high quality and affordable financial advice that is fit for purpose, on the topics they want, when they want it,” said Blake Briggs, chief executive of the FSC.

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He added: “The Review’s proposals would help millions of Australians put in place a plan to spend more of their superannuation with confidence and in a way that improves their financial wellbeing throughout their retirement”.

With the reforms, annual bequests from retired Australians paid out of the super system would decrease to $26.8 billion by 2060, down from current forecasts of $53.7 billion. 

Around 100,000 additional retirees would be able to receive advice and draw down more efficiently on their super savings. This could equate to an average of $10,000 in increased retirement incomes per individual every year. 

Previous research had predicted a 12% increase in the number of Australians with life insurance cover, or 432,000 Australians, by implementing a scaled advice model and other reforms to simplify advice.

Under a ‘do nothing’ approach, there would be a decrease in life cover for 612,000 Australians. 

Reforming the advice framework would also reduce the cost of providing advice by almost $2000 while maintaining commissions on advised life insurance, which remains an important component of adviser remuneration.