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| John Trowbridge |
The Australian Prudential Regulation Authority (APRA) has raised questions about the efficacy of current superannuation and retirement incomes arrangements in the face of an ageing population and the fallout of the global financial crisis.
APRA executive member John Trowbridge this week used an address to the Investment and Financial Services Association (IFSA) conference in Sydney to point to the growing need for development of post-retirement products.
He said this need was being driven by the ageing population, the progressive maturing of defined contribution superannuation and the shock of the global financial crisis.
At the same time, he said the interim report of the Henry Review into taxation and the Treasury’s latest intergenerational report had pointed to the need for adequate retirement incomes.
“The current superannuation focus on individualising risk with each individual carrying the risks of investment, inflation and longevity will require some rethinking if appropriate longevity protection is to be provided,” Trowbridge said. While the concept of mutuality and pooling of risk seems to have receded from view, it may need to be reintroduced in the future.”
He said the recent introduction of variable annuity products into the Australian market was an interesting development but the products were complex to manage and also difficult for the individual to understand as to the level of risk protection being provided and the price of the protection.
