Actuaries call for end to superannuation policy tinkering

  • Major parties should enshrine super objectives in legislation, stop short-term tinkering
     
  • Policymakers need to encourage focus on retirement incomes

The Actuaries Institute has called on the Federal Government to implement a number of Financial System Inquiry recommendations which will significantly improve the standard of living of millions of Australians.

             

The submission noted that changes to the retirement income system cannot be undertaken without consideration also of Age Pension costs, aged care costs and all sources of potential funding, including housing wealth.

President of the Actuaries Institute, Estelle Pearson said: “A coherent overarching framework will allow development of an efficient long-term retirement incomes strategy and reduce the incidence of short-term policy changes. Constant short- term change and tinkering involves a significant and perhaps unnecessary cost for the industry and consumers to bear,” she said.

“With a growing community and political debate about superannuation, it is essential that the Government and politicians support the FSI recommendation to enshrine in legislation, the objectives of the superannuation system. This will ensure that policy proposals that are put forward must be consistent with achieving those objectives over the long term,” Ms Pearson said.

In its submission, the Actuaries Institute noted that 60% of current superannuation assets are held by the over 50s, many of whom will move into pension phase over the next 20 years. The sheer size of the system and its impact on the wider economy as the population ages and accumulation starts to give way to expenditure requires careful policy planning.

“Our own research, which will be released in April, shows that while the superannuation system is maturing, it will not deliver more than a moderate standard of living for many retirees, particularly given increased life expectancy,” the Actuaries Institute said in its final submission to the Government on the FSI final report. “Many of these people have not had a full career in which they could benefit from the current 9% superannuation guarantee,” it said.

“Simply put, there is a financial risk for many Australians that they will live longer than their life expectancy and exhaust their assets. As personal assets are exhausted retirees will fall into the safety net provided by the Age Pension with the resultant budgetary impacts,” Ms Pearson said.

The submission strongly supported the FSI’s recommendation that superannuation trustees pre-select a comprehensive income product for retirees.

“A pre-selected retirement default system includes a comprehensive income product for retirement (CIPR) to ensure that retirees have access to strategies which will protect them against the many risks they bear including; liquidity, longevity and inflation risks.

“The introduction of a CIPR style product option should deliver greater income security and protection throughout retirement.”

“Managing risk in retirement is a complex business for individuals. On approaching retirement, an individual needs to consider a range of risks and make decisions designed to adequately fund an increasingly long life in retirement,” Ms Pearson said.

By Professional Planner
March 23, 2015
Source:  Professional Planner  

 

Any advice contained in this website is of a general nature only and does not take into account your circumstances or needs. You must decide if this information is suitable to your personal situation or seek advice.

Rolanda has been my financial adviser for 20 years. I have always found her to be highly intelligent, knowledgeable and professional in her career. Rolanda is accessible at all times and patiently explains terms that I do not fully understand. I can highly recommend Rolanda and it is a pleasure to do so. I do this with the utmost confidence. Marcia Montgomery (Retiree – home duties and ex-clerk with Water Board)
I retired Oct 2012, and seeking Financial Advice for my retirement funds, I decided to have Rolanda look after my financial affairs, and so happy I did. Since my retirement I am extremely comfortable with Rolanda’s advice, experience and strategies and the returns on my investments. Rolanda is my "Breath of Fresh Air" at this stage of my life and she makes herself available 24/7 should you need to talk with her. Steve Hoad (Ground Engineer, Qantas)
In 1997 I left Energy Australia and decided to join Rolanda Adams Financial Services for the financial support and advice that I would need into the future. That decision has proved a very good one and I am still with Rolanda who has given me advice and friendship over those many years. The advice given has ensured that my investments have been protected and the major losses, of some, during the GFC was not felt by me unduly. Rolanda and her team are very easy to contact at any time and one is always received in a most professional manner. I would be most happy to recommend Rolanda Adams Financial Services to all who need financial services. Graham Fleeton (Manager, Property Insurance Group Energy Australia (Ausgrid))
Rolanda has been my Adviser for the past 18 years. Through her wide industry experience and professional expertise she has ensured the sound development and ongoing management of my investments. Her advice has invariably been sound, timely and entirely tuned to meet my personal needs in retirement. She has a friendly, engaging manner and is always readily available to address any of my concerns. I have no hesitation in recommending her. Neil O'Keeffe (Chief Inspector (retired), Australian Customs Service)

© 2019 Rolanda Adams Financial Services Pty Ltd. All rights reserved. Site by PlannerWeb.