Govt urged to get social security settings right on CIPRs
The Government needs to move quickly to deal with the introduction of comprehensive income products in retirement (CIPRs), according to new survey data.
The survey, conducted by Money Management's sister publication Super Review during the recent Association of Superannuation Funds of Australia (ASFA) conference identified the development of CIPRs and pension-type products as a key emerging challenge for the superannuation industry.
The survey findings have come at the same time as the Financial Services Council (FSC) has reiterated its support for CIPRs but warned that the Government needs to get the settings right.
FSC senior policy manager, Blake Briggs has used a column in the upcoming edition of Super Review to state that the FSC's overarching position is that the social security treatment of retirement income products should be principles-based so as to allow innovation in that market over time.
"Retirement income product sales would be sensitive to any distortion introduced by changes to social security treatment," he said.
"If social security treatment of new retirement products are not considered in the context of the treatment of existing products they could struggle to find a place in the market."
"Achieving a suitable balance in social security settings is also critical to the success of the CIPR reforms. CIPRs should increase income, better manage retirement risks and provide flexibility. They are expected to combine account-based and pooled longevity features and should be offered to fund members by trustees as a real improvement on the status quo."
Briggs said the FSC is of the view that the social security treatment of the new retirement income products, which will be some of the building blocks of CIPRs, should be linked to the capital access schedule outlined in Treasury's final report of the Review of Retirement Income Streams.
"This principle should apply across the different types of products that may emerge once this market is opened to ensure competitive neutrality across the industry and between products," he said.
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