Positive developments likely from the Retirement Income Review
The Australian Government Treasury (Treasury) discussion papers on retirement income highlight the increasing focus on a more comprehensive risk assessment of retirement income products.
The recently announced Retirement Income Review terms of reference details the three pillars on which Australia’s retirement income system is based. This paper focuses on the second pillar of the retirement income system – compulsory superannuation, and in particular the positive outcomes that are possible in the development of retirement income products.
There are three key outcomes that can be met:-
- Further develop the risk adjusted returns disclosure arrangements criteria to assist retirees in understanding the risks inherent in retirement income products.
- Encourage the development and commercialisation of a variety of risk management approaches with the objective of improving risk adjusted returns for retirees. (Comprehensive Income Product in Retirement “CIPR” providers may form relationships with external providers as a component of the overall retirement solution.)
- Develop guidelines for ‘alternative – conservative’ and ‘alternative – growth’ asset classifications, based upon the risk level rating and in particular the products ability to address sequencing risk.