The Association of Superannuation Funds of Australia (ASFA) has backed recommendations to the Financial Systems Inquiry that it consider removing the impediments that currently hinder the development of new retirement income-stream products.
ASFA chief executive Pauline Vamos said the superannuation industry was entering a new era of product innovation which governments could actively facilitate by removing the various impediments related to income-stream products dealing with the impact of longevity.
"The superannuation industry is ready and willing to inject some much-needed innovation into the post-retirement income-stream product market. A suite of regulatory changes should be made by the Government to help facilitate this process," she said.
Vamos said the Government had indicated it would commission a review of the factors impeding the development of post-retirement products and it was ASFA's view that this should be expedited "in light of the growing need to increase the range and flexibility of such products for Australia's growing pool of retirees".
She said ASFA recommended that, at a minimum, the following impediments should be removed to help boost the post-retirement product market:
* Amending the Superannuation Industry (Supervision) Act to provide equivalent treatment of post-retirement products offered by life insurance companies and by superannuation funds, preferably through the development of regulations which apply to both.
* Amending the Australian Prudential Regulation Authority (APRA) prudential standard applying to minimum surrender values of pension and annuity products to reflect the special characteristics of such products.
* Amending the means test applied by Centrelink to exempt deferred annuities from both the asset and income tests during the period prior to payment.
* Putting a new administrative arrangement in place so that the Australian Taxation Office (ATO), APRA, the Australian Securities and Investments Commission (ASIC) and Centrelink undertake the assessment of new post-retirement products on a consistent and coordinated basis.
* Developing a specialised accreditation for the provision of retirement and post-retirement financial advice.
* Making legislative amendments to provide tax treatment for deferred annuities and other products comparable to that provided for existing post-retirement products.
* Permitting trustees of a self-managed super fund (SMSF) to purchase deferred annuities, and like products, on behalf of an SMSF member.
* Reviewing the system's design to allow MySuper products to become MyPension or likewise products.
Vamos claimed that by creating a more favourable environment — and removing the taxation arbitrage that exists between different types of products — would deliver the product innovation and choice required to meet the needs of Australia's retirees.
