The Minister for Revenue and Financial Services, Kelly O’Dwyer announced today that a consumer and industry advisory group has been established to assist develop a framework for comprehensive income products for retirement (CIPRs).
She also named the nine experts who will represent consumers and industry.
Commenting on the group, Ms O’Dwyer’s office said, “The members of the advisory group bring together substantial expertise and experience from across the consumer and superannuation sector, including in asset management, aged care, consumer protection, product development and compliance, academia and law.
“Following advice from the group, the government will undertake broader consultation with all stakeholders on the detail of its proposed approach.”
They include Nick Callil, who is the head of retirement solutions Australia at Willis Towers Watson; Nerida Cole, the head of financial advisory at Dixon Advisory; and Jeremy Cooper, the chairman of retirement income at Challenger.
Chairman at LifeCircle and non-executive director at Opal Specialist Aged Care Sally Evans was named, together with senior partner at Mercer David Knox and the Reserve Bank of Australia’s Deborah Ralston.
Director at the Actuaries Institute Australia, Class, SuperEd, UniSuper and OnePath Insurance Nicolette Rubinsztein, King & Wood Mallesons’ Ruth Stringer and Council on the Ageing (COTA) chief executive Ian Yates make up the remaining three.
“The central task of the reference group is to provide feedback and advice to Treasury on possible options and scope of a retirement covenant in the Superannuation Industry Supervision Act 1993,” Ms O’Dwyer’s office continued.
“This would require superannuation trustees to design and offer appropriate retirement income solutions to their members.”
The group was formed following 57 submissions to Treasury on the development of the CIPRs framework.
The introduction of CIPRs was a recommendation made by the Financial System Inquiry, in a move to boost the retirement outcomes for Australian retirees.
In its report, the Financial System Inquiry said, “The product would commence on the member’s instruction, or the member may choose to take their benefits in another way. Impediments to product development should be removed.”
The idea of CIPRs is too reduce or remove longevity risk, which is the risk that a retiree will outlive their savings.
This risk was addressed by Jeremy Cooper at a retirement income conference last year. He explained that the super system was designed with a 75-year lifespan in mind and as such, the question of whether the retirement system is “fit for purpose” is a pertinent one.
Noting that people not often live into their late 80s, he said: “A super fund needs a retirement income philosophy. You will not be surprised to hear that I don’t think this amounts to: being great investors.
“The return of a member’s money in the form of regular income and better managing their risks in retirement is not the same as the time-weighted returns achieved by the fund as [a] whole.”