The retirement income system should take a ‘whole-of-life' approach, including the set-up of a default MyPension for those disengaged with their super according to the Association of Superannuation Funds of Australia (ASFA)
In its submission to the ‘Review of retirement income stream regulation' ASFA backed the default MyPension option, saying it will offer an allocated pension along with the choice to invest in a product that gives longevity protection.
The comments come as ASFA outlined five principles the retirement income system should follow to deliver on its fiscal and social objectives.
ASFA chief executive Pauline Vamos called for "streamlining the process from moving from accumulation to drawdown, developing products that have greater flexibility in their design and encouraging people to take an income stream that stretches across the whole of their retirement."
Vamos also said the retirement income system should be consistent with other interdependent government policies and this integration needs to happen at two levels.
"Innovation is more likely to occur if there is a unified approach to the regulation of retirement income products across the relevant government departments," Vamos said.
ASFA said super rules need to be combined with government pension and other social security benefits, added a single contact point and "source of truth" for new product approvals would foster innovation.
Vamos said retirement products may henceforth be a blend of income streams, account management and longevity protection, and may be a part of individually managed accounts or pooled products.
"This is why it's crucial that regulation is framed to accommodate innovation in product design that reflects the objective of providing regular incomes streams over retirement, rather than specifying detailed product features," she said.
Vamos also argued for a consumer protection framework that includes disclosure and benchmarks that lets people compare products, and access to advisory facilities.
