Longevity extended in Treasury's economic models

Government will extend the longevity considerations in Treasury's retirement forecast models on the back of a suggestion by The Actuaries Institute.

Actuaries Institute chief executive Melinda Howes said the Treasurer's office had requested a briefing paper outlining the scope of annuity products and soft compulsion, following on from recommendations in its white paper release in September.

She said it would be interesting to gauge the affect on the country's finances after running some stronger longevity assumptions through the model, including its impact on aged pension costs and the cost of tax in super.

She said the paper included eight different possible branches - all of which had major problems - such as the availability of product and creating fairness across the system. 

VIEW ALL

View all

Both sides of Government had recognised the problem but would deal with it in different ways, particularly around the level of compulsion, according to Howes.

"I think what's common is that everyone recognises this longevity tsunami is bearing down on us and we need to do something about it, but there are definitely different views there," she said.

It was important the country started to take longevity into consideration now because the impact of doing nothing would be "severe", Howes said.

Howes said there was still a lack of awareness around how long people would live.

"I think what was most interesting to the MPs that we spoke to was really the lack of awareness in the general public of how long they're going to live, because obviously that's their constituents," she said.

The issue of longevity had been slated for the next Superannuation Roundtable in December, according to Howes, but as it had now been postponed twice she was unsure if it would take centre-stage.