Investors want cost-effective products that guarantee their retirement income for the rest of their lives.
Financial services consultants Milliman has revealed 91 per cent of Australian investors would find products offering a guaranteed lifetime withdrawal benefit either fairly appealing or very appealing.
The Milliman survey was conducted online and involved 1000 participants aged 45 and over, with a superannuation balance of at least $50,000.
The study showed 78 per cent of respondents thought there was scope for new products that can last their lifetime, and protect their retirement income from inflation and negative returns, as well as allowing their remaining assets to pass onto their estate after death.
However, the value proposition of the products would still have to be very attractive, with 82 per cent of participants saying the most important thing was for the new offerings to have low fees.
The results show a real opportunity exists for product manufacturers to introduce Guaranteed Lifetime Withdrawal Benefits (GLWB) to the domestic market, according to Milliman financial risk management practice leader Wade Matterson.
These are currently the most popular products, featuring guarantees, in the North American market at the moment, he said.
These products guarantee a set income stream for an individual for the remainder of their life, and would probably work as an optional extra over the top of an ordinary account-based pension.
"Australia is much more advanced than other markets in the way it looks after its retirement savings system... in terms of retirement products that address some of the key risks people face," Matterson said.
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