Retirement policy discussions going around in circles

There seems to be never-ending public policy discussions around super and retirement incomes but none of it has hit the bulls' eye on delivering outcomes, AMP chief executive Craig Meller said.

In a speech to the Committee for Economic Development of Australia Meller said there seems to be a tendency to re-regulate even before the results of the previous round of regulation can be gauged.

"We've had Stronger Super, the rewriting of our rules for prudential regulation in Australia. We've had the Senate committee inquiry into ASIC. We've had 9 per cent to 12 per cent, now back to 9.5 per cent," Meller said.

"If I add up the cost of this change to AMP alone — and, believe me, I have — it's hundreds of millions of dollars."

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Meller said superannuation regulatory changes over the last three years will work but they need time to be implemented and their success assessed.

He called for settings in retirement incomes policy that motivates Australians to save enough to shun the age-pension safety net and also said policy settings should encourage drawdown levels that will guarantee income beyond a person's average life expectancy.

"And we want to see the industry I'm part of, develop retirement solutions that enable Australians to self-insure for all but extreme tail risks," he said.

Longevity risk, inflation risk, and market volatility risk are three risks associated with retirement income sustainability.

While retirees buying an index-linked lifetime annuity would be the simple solution, it is too expensive with one third of investment return needed to cover guarantee costs, Meller said.

"While we have many extraordinarily clever actuaries working at AMP, none can create a product that makes up for a person not saving enough," he said.