The Actuaries Institute has called for profound change to the regulation of the retirement phase of superannuation, including changing the rules around lumps sum withdrawals and removing impediments to older people who want to continue working.
In its pre-budget submission to Treasury, the Actuaries Institute also recommended bringing deferred lifetime annuities under the same tax regime as other post-retirement income products.
The submission referred to Assistant Treasurer Arthur Sinodinos’ plan to conduct a broad review into the regulation of retirement income which he announced in December last year. As yet he has provided no terms of reference or timetable.
“The Actuaries Institute would like to see retiring Australian have increased choice in relation to the retirement income products they are offered and considers the removal of current impediments to product innovation an essential element of such a review, as well as ensuring that appropriated safeguards are in place to protect consumers as well as the Federal budget,” the submission said.
It said the wave of baby boomers reaching retirement was making the issue all the more urgent.
The Actuaries Institute also recommended the government increase the Age Pension eligibility age in line with changing life expectancy, and changing the design of MySuper options to better prepare for long retirements.
On the latter matter, it added: “In particular, we propose that if a person has retired from full-time employment and does not choose a specific retirement product (e.g. they are already in a MySuper default superannuation product), then they are placed in an income stream product that allows flexibility and control of capital in the earlier retirement years, and then provides some form of pooling of longevity risk (possibly a guaranteed income product) in later years to supplement the Age Pension.”
By James Fernyhough for the Financial Standard.