Retirement Portfolio Resilience Perspective
Category: Government Policy & Industry Research
This article examines the opportunities arising from Australia's Retirement Income Review and considers how improved retirement portfolio construction and investment risk management can strengthen long-term retirement outcomes.
The article discusses the importance of sequencing risk, risk-adjusted investment assessment and the development of more sophisticated retirement portfolio construction approaches that extend beyond traditional asset allocation. Viewed through today's Retirement Portfolio Resilience Framework, it reflects Gyrostat's long-standing commitment to contributing to Australia's evolving retirement system through disciplined portfolio construction that helps investors remain financially and emotionally invested throughout their retirement journey, regardless of the path markets take.
This article forms part of Gyrostat's broader body of government policy engagement, industry research and educational resources that contributed to the development of the Retirement Portfolio Resilience Framework.
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.
