POWERED BY MOMENTUM MEDIA
Retirement products essential to retain members
With an estimated $330 billion set to flow out of the accumulation phase over the next decade, super funds will have to offer annuity products if they want to retain members, according to Actuaries Institute chief executive Melinda Howes.
"Given that Australians are the second longest-lived population on the planet, we need to allow retirees to insure themselves against longevity using products like deferred lifetime annuities," Howes said.
Countries such as Chile and Switzerland have similar retirement savings systems as Australia in the accumulation phase, but "that is where the similarities stop", she said.
"Chile and Switzerland both favour annuitisation in retirement and have some compulsion," Howes said.
Whether Australia should implement "hard" or "soft" compulsion - or a range of incentives instead - was a matter for debate, Howes said.
But there are also significant behavioural, legislative and political barriers to a "vibrant and competitive" annuities market in Australia, she said.
Consumers tend to "overweight" the importance of unlikely events such as longevity; annuities appear very expensive to consumers; and the availability of the age pension is "the final nail in the coffin", Howes said.
The Actuaries Institute of Australia has recommended that the SIS Act Regulation 106 be amended to "modernise" the definition of an annuity to allow product innovation, she said.
Lifetime non-commutable annuities should also be made exempt from the Assets Test; annuities and deferred annuities should be allowed to be issued as a component of an account-based pension; and deferred annuities should be treated as a pension in the drawdown phase for tax purposes, Howes said.
Recommended for you
Introducing reforms for strengthening simpler and faster claims handling and better servicing for First Nations members are critical priorities, according to the Super Members Council.
The Commonwealth Bank has warned that uncapped superannuation concessions may be “unsustainable” and has called for the introduction of a superannuation cap.
Superannuation funds have posted another year of strong returns, but this time, the gains weren’t powered solely by Silicon Valley.
Australia’s $4.1 trillion superannuation system is doing more than funding retirements – it’s quietly fuelling the nation’s productivity, lifting GDP, and adding thousands to workers’ pay packets, according to new analysis from the Association of Superannuation Funds of Australia (ASFA).
TOP PERFORMING FUNDS
ACS FIXED INT - AUSTRALIA/GLOBAL BOND
Fund name
3y(%)pa
1
DomaCom 465 Calder Road Calder
99.46 3 y p.a(%)
2
DomaCom DFS Mortgage
95.46 3 y p.a(%)
3
Global X 21Shares Bitcoin ETF
78.55 3 y p.a(%)
4
BetaShares Crypto Innovators ETF
50.39 3 y p.a(%)
5
Global X GlobalX FANG+ ETF
47.50 3 y p.a(%)
