The retirement phase of superannuation would benefit greatly from appropriate structure in the form of pre-selected retirement products which deliver stable income and longevity protection.
That is the assessment of Challenger chief executive, Brian Benari who welcomed the release of the FSI final report on Sunday saying it represented a clarion call for real change including addressing retirees' justifiable fear of outliving their savings.
"As observed by the FSI, the account-based pensions (ABPs) which currently account for 94 per cent of the retirement income stream market don't protect retirees against outliving their savings, and should be paired with longevity risk productsm" he said.
Benari said Challenger strongly endorsed the FSI's idea for trustees to pre-select products as a practical remedy to the systemic and acute over-reliance on ABPs as a singular retirement solution, and agreed with the FSI's view that their "dominance" could be explained "in part, [by] behavioural biases.
He noted that the FSI suggested that super funds partner with life insurers to provide longevity protection, citing guaranteed annuities as a cornerstone risk management product.
"As shown by our recent announcement with VicSuper, such partnerships are already on super funds' radar, and are likely to increase in number in light of the FSI's recommendations," Benari said.
Senator Jane Hume will join the speaker lineup at the inaugural Australian Wealth Management Summit.
New research from ART has found less than a third of women feel their superannuation is in a good position, reiterating the importance of opening up the advice arena to super funds.
The peak body for the superannuation industry says that intra-fund advice should be widened to cover the transition to retirement.
The industry super fund has announced a change to the way it delivers education services and support to members and employers.
Add new comment