Australia can ‘lead the world’ on retirement

Australia can ‘lead the world’ on retirement

The retirement income framework currently being put together by Treasury has the potential to set the standard for the rest of the developed world, says Mercer.


Speaking at the FSC Retirement Conference yesterday, Mercer senior partner David Knox said Australia has the opportunity to export its retirement income products overseas.

Treasury is currently consulting on the Coalition government's proposed comprehensive income products for retirement framework (or ‘MyRetirement’).

Having largely dealt with the tax impediments surrounding deferred lifetime annuities, the Coalition has shifted its attention to the age pension means testing of retirement income products.

"Financial advisers won't recommend [pooled retirement products] until they know about the means test [treatment]," Mr Knox said.

Treasury head of retirement income policy Robert Jeremenko told the conference that the means testing decision was currently in the hands of the Department of Social Services.

Mr Knox said, "We've got to develop this retirement incomes framework that responds to the different needs [of retirees] and includes a 'nudge' that moves people in the appropriate direction."

The good news, he said, is that Australia has been "world leading" when to its pension system – and the same can be true for the retirement phase.

"In the Netherlands and in Germany, for instance, they're moving from a collective defined contribution to an individual defined contribution," he said.

Effectively, developed countries like Germany are moving towards a similar system as Australia, Mr Knox said.

"They're miles away from the end point – they're just moving there. We've been there for 25 years," he said.

"Now we're going to solve the retirement space. I think that gives us great export opportunity not only into Europe, but into Asia as the middle class there continues to build savings."

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