Retirement
‘Surprising and disappointing’ lack of innovation in retirement products
Retirement
‘Surprising and disappointing’ lack of innovation in retirement products
Despite an ageing population, the “surprising and disappointing” lack of retirement product information is holding members back, an industry expert has revealed.
‘Surprising and disappointing’ lack of innovation in retirement products
Despite an ageing population, the “surprising and disappointing” lack of retirement product information is holding members back, an industry expert has revealed.
In a media briefing, Zenith Investment Partners chief executive David Wright revealed that members approaching retirement have different needs to every other phase of wealth management, yet the industry lags behind in products for these Australians.
“We have known for some time that a population bulge has been moving through the system, so it is both surprising and disappointing that, as an industry, we haven’t made better progress on retirement products or portfolio construction,” he said.
Not only are a lack of innovations in the retirement phase hurting members, Mr Wright noted there remain unresolved issues about how the superannuation system is serving those in accumulation phase.
Commenting on the government’s Your Future, Your Super reforms, Chant West general manager Ian Fryer said the Your Future, Your Super legislation will go a long way to resolving these issues, albeit having reservations about the the superannuation performance test regarding the use of one metric over a single period to determine whether a fund passed or failed.
“The asymmetry of consequences of the proposed performance test – between not meeting the benchmark and doing much better than it – will inevitably lead to poorer investment outcomes for members in some funds, as the focus shifts in those funds from long-term performance to passing the test,” he said.
Rather than having a single test, Mr Fryer stated he believes there should be separate tests for investment performance and administration fees and that both tests must be met by each fund.
“This is at odds with Treasury’s push for one test. However, if there must be only one test, we agree that it should include administration fees. But given significant changes in administration fees in recent years and historical problems with inconsistent disclosure, the administration fees included in the test should be either current or recent fees, not historical fees that no longer have any relevance to member outcomes,” he continued.
Mr Fryer also questioned the stapling of a member to one fund for their entire career, urging the government to better address members’ needs under the proposed reforms.
“The current system of defaulting new employees to the employer’s default fund has resulted in millions of unintended multiple accounts. While Protecting Your Super has dealt with this to some extent, it does make sense to stop the creation of new unintended multiple accounts through an approach such as stapling, even though there is a very real danger of members remaining in funds that are not suited to them based on industry and insurance cover,” he continued.
“However, if we are going to introduce stapling, the ATO will need to provide a system from day one where details of new employees can be electronically uploaded in bulk, and stapled fund details are provided to employers in bulk, not just one by one. If this is not available, then the introduction of account stapling should be delayed,” Mr Fryer concluded.
RELATED ARTICLES
About the author
About the author
Retirement Planning
Majority of Australians still unsure about their retirement prospects
A recent survey conducted by MFS Investment Management® has shed light on the ongoing uncertainty faced by many Australians regarding their retirement plans. Despite a slight increase in confidence ...Read more
Retirement Planning
Wage growth steadies as businesses navigate economic challenges
In a sign that the Australian labour market may be finding equilibrium, wage growth has stabilised this quarter, according to Employment Hero's latest data. This development comes as employers ...Read more
Retirement Planning
Simplified retirement advice: Key to overcoming behavioural biases, experts say
In a bid to enhance retirement outcomes for Australians, a recent whitepaper by Industry Fund Services, in collaboration with Challenger, has highlighted the importance of simplifying retirement ...Read more
Retirement Planning
Rest launches Retire Ready digital experience to empower members approaching retirement
Rest, one of Australia’s largest profit-to-member superannuation funds, has unveiled a new digital experience aimed at making retirement preparation simpler and more personalised for its members. Read more
Retirement Planning
New Framework Aims to Bridge Australia’s Financial Advice Gap
A ground-breaking framework introduced by the Actuaries Institute promises to revolutionise how Australians access financial support, potentially transforming the financial wellbeing of millionsRead more
Retirement Planning
The downsizer dividend: how Australia’s ageing shift will reshape property, finance and AI strategy
Downsizing is moving from a personal milestone to a system-level lever for Australia’s housing market. As policymakers court reforms and agents eye fresh listings, the real profit pools will accrue to ...Read more
Retirement Planning
Half of Australians financially insecure about retirement as AMP launches new initiative
In a significant move aimed at addressing the retirement concerns of Australians, AMP has unveiled the Retirement Confidence Pulse, a national barometer designed to gauge the financial confidence of ...Read more
Retirement Planning
North introduces Grow to expand Australia's financial advice footprint
In a bid to bridge the gap between the demand for financial advice and its accessibility, North, a prominent platform for superannuation and retirement in Australia, has launched an innovative ...Read more
Retirement Planning
Majority of Australians still unsure about their retirement prospects
A recent survey conducted by MFS Investment Management® has shed light on the ongoing uncertainty faced by many Australians regarding their retirement plans. Despite a slight increase in confidence ...Read more
Retirement Planning
Wage growth steadies as businesses navigate economic challenges
In a sign that the Australian labour market may be finding equilibrium, wage growth has stabilised this quarter, according to Employment Hero's latest data. This development comes as employers ...Read more
Retirement Planning
Simplified retirement advice: Key to overcoming behavioural biases, experts say
In a bid to enhance retirement outcomes for Australians, a recent whitepaper by Industry Fund Services, in collaboration with Challenger, has highlighted the importance of simplifying retirement ...Read more
Retirement Planning
Rest launches Retire Ready digital experience to empower members approaching retirement
Rest, one of Australia’s largest profit-to-member superannuation funds, has unveiled a new digital experience aimed at making retirement preparation simpler and more personalised for its members. Read more
Retirement Planning
New Framework Aims to Bridge Australia’s Financial Advice Gap
A ground-breaking framework introduced by the Actuaries Institute promises to revolutionise how Australians access financial support, potentially transforming the financial wellbeing of millionsRead more
Retirement Planning
The downsizer dividend: how Australia’s ageing shift will reshape property, finance and AI strategy
Downsizing is moving from a personal milestone to a system-level lever for Australia’s housing market. As policymakers court reforms and agents eye fresh listings, the real profit pools will accrue to ...Read more
Retirement Planning
Half of Australians financially insecure about retirement as AMP launches new initiative
In a significant move aimed at addressing the retirement concerns of Australians, AMP has unveiled the Retirement Confidence Pulse, a national barometer designed to gauge the financial confidence of ...Read more
Retirement Planning
North introduces Grow to expand Australia's financial advice footprint
In a bid to bridge the gap between the demand for financial advice and its accessibility, North, a prominent platform for superannuation and retirement in Australia, has launched an innovative ...Read more
