Retirement income adequacy identified as key challenge

The strong growth in the number of Australians entering retirement means there is an element of urgency in the Financial System Inquiry’s review of the nation’s retirement income needs, according to the principal of actuarial consultancy, Rice Warner, Michael Rice. 

Pointing to the fact that the interim report issued by the FSI had observed that the retirement market was under-developed and did not meet the risk management needs of retirees, Rice said this demanded a clear strategic direction from government along with meaningful tactical responses by the superannuation industry, legislators and Australian consumers. 

He said Rice Warner would be preparing a submission to assist the FSI with analysis and data to help form its thinking on solving Australia’s bigger retirement funding problems. 

“There is relative urgency here. The number of Australians entering retirement is growing strongly, and we expect the number of male retirees who draw a superannuation pension to more than double from 950,000 to 2,021,000 over the next 15 years - an increase of more than 5.2 per cent a year in numbers,” Rice said. 

He said that, simultaneously, female retirees would increase at a greater rate from 981,000 to 2,274,000 (5.8 per cent a year growth). 

“From an industry reaction perspective, Rice Warner believes that the next growth phase for superannuation funds lies firmly in resolving demand from older members to help solve a number of issues, including funding adequacy in retirement,” he said.