In a joint statement, Treasurer Jim Chalmers and Financial Services Minister Stephen Jones announced the release of a consultation and discussion paper on the retirement phase of superannuation.
“While there is recognition of super’s importance in building nest egg savings, there has been less attention on optimising its role in retirement. There’s a clear need for better information, support and well-rounded income products to help retirees make the most of their super,” the statement said.
“We want to ensure super delivers on its foundational promise of providing a dignified retirement for more Australians.”
The discussion paper seeks to enable this by examining three key areas: supporting members to navigate the retirement income system; supporting funds to deliver better retirement income products and services; and making lifetime income products more accessible.
The discussion paper also includes specific mentions of the role advice plays in retirement, and cites the Retirement Income Review from 2020, which found that the complex retirement landscape is made more challenging when individuals lack access to the information and guidance they need or have trouble comprehending it.
“Around a quarter of people seek advice as they approach retirement age,” the paper said.
“The review found that a lack of assistance, guidance or advice, low financial literacy, and inherent complexity makes it hard for people to make well-informed choices about their retirement income.”
The consultation paper also touches on the government’s response to the Quality of Advice Review, and details some of the mechanics that will be part of the upcoming second tranche.
“Separately, the government has committed to expanding the provision of advice by superannuation funds through its Delivering Better Financial Outcomes package,” the paper said.
“This would include ‘nudges’ that allow funds to communicate basic information about retirement to members at certain ages or times during their working lives before they reach retirement, for example at ages 50 and 55, and checking in throughout retirement.
“It would also support the use of digital tools provided by superannuation funds such as calculators and retirement income projections.”
The paper added that it would also focus on some of the “additional actions that would build on this financial advice package to improve the member experience during, and in transition to retirement”.
“This might include basic factual information, education, or information produced by government,” it said.
While the paper noted that “assistance through advice and guidance is one way that funds support members”, adding that this will continue to play a role, it also acknowledged that there are limitations to the effectiveness of advice without improved retirement products.
“The government is already acting to expand access to retirement income advice for members through their superannuation fund, as part of the Delivering Better Financial Outcomes package,” the paper said.
“However, advice has its limits if retirement income products are not available to meet members’ needs. Funds need to provide well-rounded products that are appropriate for the complex risks and decisions members face, and that balance all three of the retirement income covenant objectives.
“The approach funds take will also need to recognise that some members will not be proactive or seek advice, and their retirement income interests must also be upheld.”
Additionally, Mr Chalmers and Mr Jones said that funds need to do more to understand their members’ retirement needs and provide products and services tailored for their retirement.
“We also recognise there is a role for government and regulators in creating an environment that supports these changes.”
Back in August, ifa learnt that Treasury was planning to release a consultation paper to strengthen the accessibility of retirement products, a paper which would canvass problems with financial advice among other things.
“Half of retirees draw down the minimum and, on average, people who draw down the minimum will still have about a quarter of their super remaining when they pass on,” Dr Jim Chalmers said on a roundtable hosted by The Australian Financial Review at the time.
Commenting on the government’s intention to probe Aussies’ unwillingness to spend their super, chief executive officer of the Financial Services Council (FSC) Blake Briggs said at the time: “Eight hundred Australians are retiring every day, and the government is right to prioritise action to make sure these consumers can choose from a range of products consistent with superannuation’s promise of delivering income for a dignified retirement.
“The retirement income covenant requires superannuation funds to formulate strategies to optimise retirement outcomes for members, however, the FSC believes this framework will be more successful if the government removes regulatory barriers that are inconsistent with the covenant.”
Submissions to the consultation are open until 9 February 2024.
Yep there are enough retirement products already – just let retirees work a little bit without penalty, access a low cost income stream in line with risk profile and maximise Centrelink. There – done.
There has been news of late about Podiatric surgeons being able to conduct invasive operations without a medical degree due to special rules or carve outs being available, and the subsequent damage caused to patients.
Orthopaedic surgeons are mortified that this has been allowed to happen and they are now faced with repairing the damage caused to patients and public trust.
Why are the government trying to over complicate things by stating that we need more retirement products? What is currently available is absolutely sufficient for everyone. What is lacking is access to affordable advice (even tax deductible) for everyday Australian’s and until the politicians actually address this real issue nothing will change.
Because the government can’t resist the pot of gold in front of them and want Industry Super to offer annuities, so that they can tie up that money in the governments’ own infrastructure and social projects rather than fund it themselves.
No wonder they can keep coming out with new series of Utopia…plenty of material to work with
QAR is not even implemented in any way and good Ol’ Canberra govt 7 Bureaucrats are already onto the next freaking time wasting useless review.
If Government cut 70% of the useless Red Tape they Legilsted, Regulators like ASIC, AFCA and FARSEA then added too………
Guess what, Real Advisers could see at least twice as many clients, if not 3 times as many and solve a huge amount of the above Retirment problems.
But no, Canberra wants to promote vertically owned Industry Super sales Advice only.
here we go – let the comments begin on the ‘desk jockey’, ‘used car salesmen’ and ‘crooks’ that will be manning the phones at super funds giving advice…
At least a “used car salesmen” typically have some training right?
they are RG146, at the very least..
So you are stating they are legally required to be RG146? Non relevant?
In the absence of fully qualified advisers being able to give full advice (and I am not disagreeing with anyone on the inability to do so due to compliance costs, ridiculous SOA requirements etc etc) to the masses, some retirement planning advice will assist..
Hair Dresser has more training I’m told? You want advice that sort of Advice?
Is that the same 3 day qualification that most Real Advisers, Canberra Pollies & Bureaucrats ALL said was crap for many many years.
But now somehow the Canberra Red Tape Warriors are going to say it’s a wonderful qualification.
HYPOCRITES !!!!! &
LIARS !!!!!
So Education, Financial Planning Degrees, FASEA Exam, CPD, Code of Ethics, – not needed you reckon?