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.

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.”

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.