The challenges thrown up by longevity are common across the United Kingdom, the United States and Australia, but more seems to be getting done to address the issue in Australia, according to new research released this week.
The research, conducted by the Actuaries Institute Australia, the American Academy of Actuaries and the UK’s Institute and Faculty of Actuaries, points strongly to the Financial Systems Inquiry (FSI) and the Government’s response as significant steps in the right direction.
It makes clear there is a political appetite in all three nations for the pursuit of policies addressing the challenges of longevity but also makes clear that, increasingly, responsibility is being carried by individuals who are underestimating their life expectancy.
Releasing the research this week, the three bodies said the international study supported measures to increase pension contributions, encouraged the introduction of lifetime income guarantee or “intelligent default products”, and criticised “tinkering” with current measures which further confused those nearing and in retirement.
They said the research also favoured innovation by product providers amid a flexible regulatory framework while noting that “changes to the retirement income system cannot be undertaken without consideration also of pension costs, aged care costs and all sources of potential funding, including housing wealth”.
Commenting on the research, Actuaries Institute president, Estelle Pearson noted the Australian Government’s efforts with respect to the FSI and its approach to superannuation and the age pension.
“While these measures are not yet enacted or indeed spelt out in significant detail, there is now a framework in place to correct what needs to be fixed and to improve what needs to work better,” she said.
Pearson said the research had underlined the significance of the Government’s response to the FSI , particularly its commitment to enshrining the objective of the superannuation system in legislation and assessing the appeal of ‘intelligent default’ products for retirees.
