Opportunity for CIPRs to include aged care features

Comprehensive income products for retirement (CIPRs) have a unique opportunity to build in dedicated health and aged care features, according to Bravura Solutions.

The firm’s ‘Superannuation Megatrends: 10 Trends Reshaping the Industry’ report named post-retirement and aged care as two of the trends that would reshape the Australian super system in years to come.

Bravura said the CIPR features could include dedicated investment products or insurances for health and aged care, or mechanisms for drawing on housing equity such as equity release products, downsizing or income contingent loans.

“Funds will be expected to bridge the gap in education and advice, and assist their members into factor in health and aged care costs into retirement planning,” the report said.

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“Super funds wishing to remain relevant and competitive will not hesitate to enter this new realm.”

Bravura also said that the key challenge for super funds would be to design and deliver simple, low cost CIPRs that effectively balanced the competing objectives in retirement – securing a high income, managing longevity risk and retaining flexibility.

“To deliver these new products, super funds will need modern agile administration solutions and operational capabilities to manage far greater complexity in the form of add-ons to allocated pension products, multifaceted product suites and/or standalone products that bundle together desirable features,” it said.

“Systems must allow for flexibility in product design and mix, simplicity in administration, efficiencies in service delivery and adaptability as products evolve.”

The other trends included in the report were ‘whole of life’ super offerings, hyper personalisation, big data analytics, digital advice, regulation and compliance, automation and integration, insourcing and outsourcing, and technological distractions.