Speaking at a Committee for Sustainable Retirement Income leadership forum in Canberra yesterday, Financial Services Minister Kelly O’Dwyer said the government will allow super funds to “pre-select” retirement income products for their members.
The products – CIPRs – were first proposed by the 2014 Financial System Inquiry and were supported by the Turnbull government in October 2015.
Ms O’Dwyer said CIPRs seek to increase individuals’ standard of living and choices in retirement.
“Managing longevity risk – a risk we actually like – is essential to drawing a higher level of income with the confidence that retirees will not outlive their savings,” she said.
“To support the introduction of CIPRs, as part of the superannuation reform package, the government is removing barriers to innovation in retirement income stream products.”
Specifically, the government will extend the tax exemption on earnings to new retirement products that help retirees “better manage consumption and risk in retirement”, Ms O’Dwyer said.
The FSI found that incomes from CIPRs could be 15 to 30 per cent higher than those from the typical strategy of drawing the minimum amount from an account-based pension.
“We will facilitate superannuation trustees pre-selecting these products for members to help guide members at retirement,” Ms O’Dwyer said.
“However, people will not be forced to have these products – they will simply have a broader range of choices in how they want to support themselves in their retirement. After all, it is their retirement and it is their money.
“Of course, the government will have more to say on this in coming months when we release a discussion paper on the implementation of CIPRs.”
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