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Retirement

Retirees need government income product now

  • September 03 2019
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Retirement

Retirees need government income product now

By Cameron Micallef
September 03 2019

The government’s plan to develop a Comprehensive Income Product for Retirement (CIPR) by 1 July 2022 is too slow, industry experts have warned.

Retirees need government income product now

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  • September 03 2019
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The government’s plan to develop a Comprehensive Income Product for Retirement (CIPR) by 1 July 2022 is too slow, industry experts have warned.

Retired old couple

While Australia is good at accumulating funds, the government has acknowledged that the low returns on offer have become an issue for retirees where funds are failing to provide much-needed incomes.

The CIPR would address and provide members with access to a stable income stream throughout their retirement at a low cost, with added flexibility to convert to capital at a member’s request.

Investment company Parametric has questioned the time frame the government has provided for putting a CIPR in place, noting that politicians need to get on the front foot and respond to the strategic challenge of a good retirement now.

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According to Parametric CIO Paul Bouchey, “Although superannuation funds can follow the government’s legislative timetable to develop a Comprehensive Income Product for Retirement (CIPR) by 1 July 2022, that’s hardly an optimal outcome for fund members who have retired or are making retirement plans now.”

Retired old couple

He said that they want a timetable dictated by their needs, not by government legislation.

The company’s managing director of research, Raewyn Williams, also weighed in on the issue, saying the government should view this as an opportunity to reinvigorate the superannuation industry.

“Superannuation funds should appreciate that CIPR represents a license for fresh thinking about how to build investment portfolios that map to members’ needs and objectives, which are quite distinct in retirement,” Ms Williams stated.

Mr Bouchey also iterated a need for retirees to have exposure to equities and other growth assets in any government income product.

“Certainly, it’s clear that the investments backing a CIPR will need to have some exposure to equities or other growth assets,” he stated.

“Superannuation funds should be looking now for different approaches, such as specific defensive or low-volatility strategies and factor-based strategies that use simple construction rules to produce better-than-market income and volatility outcomes,” Mr Bouchey concluded.

 

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About the author

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Cameron is a journalist for Momentum Media's nestegg and Smart Property Investment. He enjoys giving Aussies practical financial tips and tricks to help grow their wealth and achieve financial independence. As a self-confessed finance nerd, Cameron enjoys chatting with industry experts and commentators to leverage their insights to grow your portfolio.

About the author

author image
Cameron Micallef

Cameron is a journalist for Momentum Media's nestegg and Smart Property Investment. He enjoys giving Aussies practical financial tips and tricks to help grow their wealth and achieve financial independence. As a self-confessed finance nerd, Cameron enjoys chatting with industry experts and commentators to leverage their insights to grow your portfolio.

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