Government implementation of a so-called MyPension product may not be the single best answer, according to actuarial consultancy, Rice Warner.
Rice Warner senior consultant, Alun Stevens has pointed to the number of submissions to the Financial System Inquiry (FSI) urging the introduction of a default retirement product which could be utilised by superannuation funds.
However he has used an analysis published on the company's web site to say that it is Rice Warner's considered view that such a product, alone, will not resolve the underlying issues.
"An effective, cogent default structure will provide older members with a package to deal with the complexity of retirement adequacy," Stevens wrote. "Based on its interim report, Rice Warner expects the FSI to make key recommendations around retirement incomes."
He said it was hoped these recommendations would recognise the essential need for flexibility and account for the need for high levels of growth assets to protect against inflation and longevity. "Australia's superannuation pool has been enhanced by the wise decisions to invest heavily in growth assets for the last 25 years (far more than in other jurisdictions). Similarly, retirees will benefit from enhanced earnings on their pension accounts," Stevens said in his analyisis.
He said Rice Warner believed the best approach is for the industry was to establish a number of principles that need to be applied to default retirement structures, including that adequate provision be made to meet essential expenditure (lump sum benefit) at point of retirement - free of risk of market fluctuations and provision to ensure stability of incomes in retirement based on income of four per cent to six per cent of the retirement account balance each year.
As well, Rice Warner is urging that incomes are protected against inflation throughout retirement and flexibility to allow members to respond to changing circumstances and the contingencies of life.