Requirements for scaled and intra-fund advice need to be reviewed to determine whether modification of further guidance is needed to facilitate the provision of comprehensive income products in retirement (CIPRs), according to a committee.
The Committee for Sustainable Retirement Incomes (CSRI) said pre-retirees no later than age 50 would need guidance around CIPRs.
CSRI’s latest policy engagement report said while most retirees preferred to not rely on expensive personal financial planning advice, they needed iterative engagement as they considered when they intended to retire, or transitioned to retirement, and whether to vary their voluntary contributions to achieve their target retirement income.
It said strategies to increase the role of financial advice in relation to retirees managing their super balances included:
- Ensuring training of advisers in relation to retirement related matters, such as annuities, Age Pension, and aged care funding;
- Setting standards for financial advisers who were advising on retirement matters to ensure competency across the complexity of retirement issues; and
- Regulatory settings to facilitate the rapid evolution of digital advice in retirement matters.
CSRI said the challenges for CIPRs were not only about product design but also the obligations of trustees, and protections for trustees, the regulatory retirements for the product offers, and the degree of compulsion on funds to offer them.
“The process will only work well if tax and transfer settings in retirement complement the arrangements for superannuation in the accumulation phase, and are sufficiently stable for the purposes of planning and for decision-making at retirement,” the report said.
“The superannuation funds are the central players in this, but it is vital that the consumer voice is heard and is given first priority. The aim has to be to make our defined contributions based system look much more like a defined benefit scheme.”
