Despite Australia having a limited retirement income product offering compared to other developed countries, a regulatory framework created over two decades ago stymies companies wanting to launch new offerings.
Head of distribution for Allianz Retire+, a relatively new player on the post-retirement product stage, Catriona Wortley, today told delegates at a Lonsec Symposium that the biggest issue the company faced in entering the Australian market was navigating its regulatory framework.
“Getting all the legislation, the Superannuation Industry Supervision (SIS) Act and Life Insurance Framework legislation, to work together for quite an innovative product was challenging,” she said, and took far longer than Allianz Retire+ had originally anticipated.
Wortley said that this “was not surprising at all”, however, “considering we have regulation that was put in place in the nineties”.
The SIS Act was enacted in 1993, while the LIF came into force in 1995.
Wortley also said that the providers faced commitment issues when bringing retirement products to the Australian market, needing to take a more long-term perspective when launching new offerings, and that there were distribution issues for such products in Australia.
Recent research by Allianz Retire+ found that people fear running out of money in retirement more than death however, and Wortley observed that the depth of retirement products on offer in Australia was “pretty poor”, emphasising the importance of improving the barriers faced by new offerings in the retirement income space.
The regulatory framework was very restrictive until 2017 when the way was opened to alternative retirement products, like the Optimum Pensions Real Lifetime Pensions – an investment linked pension. In addition, the DSS rules are changing on 1 July this year to allow more lifetime retirement income streams to receive concessional Age Pension treatment. I agree that the range of retirement products needs to be expanded. As an industry we need to do more to ensure that Australians can retire with more security and enjoy a sustainable lifestyle without the fear of running out of money – unfortunately we cannot do anything about the fear of dying.