The Government needs to look into options to increase the uptake of incomes stream products including bringing in sensible default options for retirees moving into or already in the super drawdown phase.
That was the Actuaries Institute's response to the Financial System Inquiry interim report, which added longevity risk management is a weak link in Australia's retirement system.
It said there are many hindrances preventing institutions from creating retirement income products, restricting retirees to choose between lump sums, account-based pensions and guaranteed immediate annuities.
The response also highlighted the obstacles that are stopping the creation of retirement income products with risk management features such as annuities, which is forcing retirees to choose between lump sums, account-based pensions and guaranteed immediate annuities.
These include the SIS regulations, age pension asset test and income test, and the need for various approvals with different organisations with different interests.
The solution is for the Government to design a policy that removes or cuts the regulatory, economic and consumer barriers to encourage innovation in the retirement income segment.
The Institute also said Australia has an incoherent approach to its retirement income system and it is in need of a solid policy framework, with an assigned policymaker.
It also acknowledged that operating costs and fees seem high compared to international counterparts but said many factors need to be taken into account before aiming to lower fund fees.
Many domestic funds are "choice" funds rather than default plans, and things like financial advice, insurance, distribution and legacy system maintenance also need to be taken into account.
Moreover, the industry needs to monitor how the SuperStream and MySuper reforms will change operating costs before taking action on fee levels.