The FPA has called on the government to consider making suitable changes to the existing taxation system to help facilitate better retirement outcomes for Australians.
In his address to the Tax Forum, FPA chief executive Mark Rantall outlined a number of tax incentives that would encourage individuals to seek financial advice and allow product providers to develop better annuity solutions for retirees.
The core recommendations Rantall presented to achieve these outcomes were to allow fees charged for financial advice to be tax deductible and fee rebates for low to middle income earners, and to change existing tax and superannuation laws to assist the introduction of better products to address longevity risk.
"Research on the value of advice conducted in 2008 by actuarial firm Rice Warner concluded that almost everyone would be better off in retirement if they had access to financial advice along the way," Rantall said.
"Clearly, if Australians make better financial decisions before and in retirement that would take pressure off the age pension system and ease the future tax burden."
Some of the outcomes he said would result from the FPA's suggested legislative changes would be the ability for people to pay for financial advice out of their pre-tax salary and funding a 'one-off' superannuation advice fee via a percentage of the current co-contribution payment.
In regard to new products to address longevity risk, he identified some specific offerings that would help the existing situation.
"In particular, the FPA would like to see legislation amended to allow providers to develop 'deferred annuities' and other 'longevity protection'-style income streams, where individuals can choose when to begin retirement income payments," he said.
"As the 2010 Treasury "Intergenerational Report" highlighted, Australia's population is set to age rapidly over the next few decades, putting many people at risk of outliving their retirement savings. Deferred annuities would go some way to addressing that looming longevity risk."
