Many Australian retirees are living too frugally for fear they are going to run out of money, something which justifies the Government moving to clear obstacles to the development of appropriate post-retirement products, according to the Institute of Actuaries of Australia.
The Institute has used its pre-Budget submission to the Treasury to reinforce its arguments that the Government needs to act to remove legislative barriers that are preventing the innovation and development of retirement income stream products.
It said that data suggested that more than 80 per cent of retirement dollars now go into account-based pensions - a trend that suggests that Australian retirees are not just accumulating wealth through super and then spending it all at retirement.
"Indeed, many of them are living too frugally because they are worried about running out of money," the pre-Budget submission said.
It said the institute was confident that implementing the Financial System Inquiry (FSI) recommendations that aim to make retirement incomes more prevalent and efficient would eventually ease the demand for Age Pensions.
It said it particularly believed the FSI recommendation requiring superannuation trustees to pre-select a comprehensive income product for members retirement that delivered a regular and stable income stream and a component to manage longevity risk should assist the Government to achieve its objective of achieving a credible path to surplus.