Products development under the MyRetirement/ comprehensive income products in retirement (CIPRs) framework will stall if the Government does not make a determination on the treatment of the products under the Age Pension means test, the Actuaries Institute believes.
Willis Towers Watson head of Australasia, Andrew Boal, said if the Government failed at this stage and if the broad framework was not right, there was little chance of helping retirees deal with longevity risk in retirement in order to improve the efficiency of the superannuation system.
The institute urged the Government to make a determination of means test treatment and pointed to the Federal Treasury comment that post-retirement super policy settings needed to be right for a mature super system. It also said that retirees were offered very little choice or guidance when they took their retirement savings out of the super system, and they worried they would outlive their savings.
This resulted in many retirees having living standards that was much lower than was likely to occur if they were confident they would never run out of money.
“There is an opportunity to make the retirement system more efficient, to establish the framework in which we can then debate all other post-retirement issues,” Boal said.
“But the industry must first know how MyRetirement products will be dealt with under the Age Pension means tests.
“There is an opportunity to make the retirement system more efficient, to establish the framework in which we can then debate all other post-retirement issues. But the industry must first know how MyRetirement products will be dealt with under the Age Pension means tests.”
Boal said the structure of the post-retirement framework must be flexible enough to accommodate members of industry and retail super funds. He said it must allow for the development of products that meet the needs of members with low balances, and for those who have lower life expectancies.
