Product flexibility and advice are key to effective retirement income strategies: AIST’s response to Retirement Income Covenant paper
AIST has reiterated its support for a flexible, principles-based Retirement Income Covenant and called for a greater focus on the provision of financial advice in a fund’s retirement income strategy.
While noting the intent behind the Government’s Retirement Income Covenant is to encourage retirees to spend their superannuation by the time they die, AIST’s submission calls for greater consideration on the needs of the majority of Australians who will be retiring on a full or part pension over the next couple of decades and won’t be passing on large super bequests.
“While AIST supports superannuation being for retirement rather than bequests, it’s important retirement income strategies recognise that there won’t be large numbers of Australians leaving significant bequests of unspent super,” AIST CEO Eva Scheerlinck said.
Against this backdrop, AIST says existing products, such as account-based pensions, rather than annuities and other longevity-type products, will continue to provide the most effective retirement income stream for most retirees, who have modest super balances, for some decades to come. For such retirees, the age pension will continue to provide a longevity safety net.
AIST’s submission highlights the important role of financial advice in funds’ retirement income strategies, noting that the Government’s planned review of advice in 2022 should be fast-tracked and progressed in tandem with the development of the Covenant and a legislated objective for superannuation. It also recommends that intra-fund advice be expanded to include transition to retirement arrangements for the member and their spouse, as well as including advice on optimising entitlements to social security benefits.
Noting that the position paper calls for funds to collect and use member data – such as home ownership - to formulate a retirement income strategy, AIST says much of this data is currently unavailable to funds and recommends that the Government explore measures that support funds collecting this data from members as well as different sources, including the ATO, the ABS.
Media enquiries: Janet de Silva, AIST Senior Media Manager 0448 000 499
AIST is the peak body for the $1.5 trillion profit-to-member superannuation sector which includes industry, corporate and public sector funds
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