The government must remove the significant factors impeding the development of post-retirement products, according to the Association of Superannuation Funds of Australia (ASFA).
The association said it supports the argument made by the Centre of Excellence in Population Ageing Research in its submission to the Financial System Inquiry that the range of post-retirement products available to retirees must be broadened.
ASFA chief executive Pauline Vamos said the industry is entering an “era of product innovation, which governments could actively facilitate by removing the various impediments related to income-stream products dealing with the impact of longevity”.
ASFA has suggested removing eight specific impediments.
These include amending the APRA prudential standard applying to minimum surrender values of pension and annuity products to “reflect the special characteristics of such products”, and altering the means test applied by Centrelink to exempt deferred annuities from both the asset and income tests during the period prior to payment.
ASFA also believes the government should make legislative amendments to provide tax treatment for deferred annuities and other products with similar offerings for existing post-retirement products.
The association argued that a new administrative arrangement should be put in place so that the ATO, APRA, ASIC and Centrelink can assess the new post –retirement products on a “consistent and coordinated basis”.
ASFA also recommended the government conduct a review of the superannuation system to “allow MySuper products to become MyPension or likewise products”.
“Creating a more favourable environment and removing the taxation arbitrage that exists between different types of products will deliver the product innovation and choice required to meet the needs of Australia's retirees,” said Ms Vamos.
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