The Actuaries Institute has added its voice to calls for the Government to embrace an “objective” for the superannuation industry.
In a final submission responding to the Financial Systems Inquiry (FSI), the institute’s president, Estelle Pearson said a coherent overarching framework was necessary to allow for the development of an efficient long-term retirement incomes strategy and to reduce the incidence of short-term policy changes.
“Constant short-term change and tinkering involves a significant and perhaps unnecessary cost for the industry and consumers to bear,” she said.
Pearson said that with growing community and political debate about superannuation, it was essential that the Government and politicians supported the FSI recommendation to enshrine in legislation, the objectives of the superannuation system.
“This will ensure that policy proposals that are put forward must be consistent with achieving those objectives over the long term,” she said.
As part of its submission, the Institute noted that 60 per cent of current superannuation assets were held by the over 50s, many of whom would move into pension phase over the next 20 years.
Further it foreshadowed the release of research next month which it said would show that while the superannuation system was maturing, it would not deliver more than a moderate standard of living for many retirees, particularly given increased life expectancy.
“Simply put, there is a financial risk for many Australians that they will live longer than their life expectancy and exhaust their assets,” Pearson said. “As personal assets are exhausted retirees will fall into the safety net provided by the Age Pension with the resultant budgetary impacts.”
