Australia's ageing population is desperately in need of a new set of retirement income products, argues BT Financial Group.
Speaking in Sydney, BT general manager for superannuation, Melinda Howes, said Australia’s five million Baby Boomers are moving through retirement at the rate of 289,000 a year, and may find themselves hampered by the limited range of post-retirement products.
“If we can improve our post-retirement offers we can strengthen the overall superannuation system and ensure more Australians are financially secure in retirement,” she said.
According to Ms Howes, the current superannuation landscape includes many hurdles for members to consider when thinking about retirement.
“The good news is we’re all living longer,” she said.
“The bad news is that ever-increasing longevity risk opens up the number of variables and can make retirement planning tricky."
Ongoing market volatility is another risk that retirees face, she said.
“It is a challenge, but one that the industry can handle. There are things the broader industry can tackle to improve our first-class superannuation system,” she said.
“The first step is to engage with super members in a meaningful way about their super and retirement.
“Secondly, as an industry, we need to deliver post-retirement products that deal with the main retirement risks: longevity risk and market risk.”
Ms Howes said recent government announcements, including comprehensive income products for retirement (CIPRs) and changing the tax treatment of deferred annuities, were encouraging for product development, but no-one has yet tackled how to invest in retirement to avoid sequencing risk.
“In developing these new offers we need to work closely with our members to make sure we’re meeting their needs. A customer-led approach will help us to support members secure their best financial future for life,” Ms Howes said.
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