Australians are “starved for choice” when it comes to retirement income products, and more choice and diversity of products and providers are needed, says Mercer.
Numerous products are available in the accumulation phase, but there are only three providers of retirement income products other than account-based pensions, the global company said.
“Developing a more diverse retirement income market in terms of products, providers and distribution channels has never been more important,” Mercer managing director and Pacific market leader Ben Walsh said.
“In stark contrast to the abundance of choice in the accumulation phase of super, Australians are starved of choice and diversity when it comes to options to secure an adequate and sustainable retirement income that will last as long as they do.”
Mr Walsh said the superannuation industry needs to offer more than account-based pensions and fixed annuities.
“We need more options with longevity risk protection, which means more products that can provide an income for life.”
Mr Walsh argued that three shifts in the industry need to occur. First, more industry consultation is needed. Second, more retirement income options and a broader distribution of such products are needed.
“How retirement income products are accessed by customers is just as important providing choice and diversity of products.
“Product design is important, but it is too inward looking for the industry – we should be talking about distribution and access to more retirement income options for Australians,” he said.
Finally, Mr Walsh said the industry needs to simplify super and better help consumers make decisions that will improve their retirement outcome.
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