Superannuation funds should not drag their feet on creating post-retirement products, according to new analysis form actuarial research house, Rice Warner.
The analysis, published this this week, suggests that while the Government has announced it will delay the implementation of the Retirement Income Framework and Comprehensive Income Products in Retirement legislation, the industry should not be lulled into inaction.
“Despite the extension, retirement won’t wait,” the analysis said. “Over the next decade those Baby Boomers still in the workforce will retire. At this point members will either withdraw their superannuation assets or transfer into the retirement phase.”
It said that over the next decade 2.8 million accumulation accounts would potentially move to the retirement phase and that the company’s projections indicated that, despite the expected drawdowns in retirement, this would drive growth of 35 per cent in the asset base supporting retirement accounts in the next decade.
“If funds do not orient their value proposition towards the needs of retiring members, they will look elsewhere,” the Rice Warner analysis said. “Becoming a fund-for-life through providing a high-quality retirement product will be critical, particularly in the context of increasingly stringent scale and member outcomes requirements.”
Rice Warner said its research showed that there was room to improve member outcomes by supplementing Account Based Pension (ABP) products, especially for longer lived individuals.
It concluded on the note that despite the respite from Government, the need to develop quality retirement products had never been greater and that forward-thinking funds were already looking to push the boundaries of product development with a strategy of becoming a fund for life.
“Funds who miss the first-mover or fast-follower advantage, will likely lag the rest of the industry and become tomorrow’s takeover targets,” the analysis said.