Retirement income products back on the table

The Federal Government has placed retirement income products back on the policy table.

The Minister for Financial Services, Chris Bowen, has acknowledged the Cooper Review's lack of focus on retirement income products and said the Government needs to do more to make them attractive.

In an address to an Association of Superannuation Funds of Australia (ASFA) luncheon in Melbourne, Bowen said that retirement income streams and longevity risk was still a discussion the Government and industry needed to have, but the Government would not take on responsibility for “mandating compulsory retirement income products”.

The Government needed to examine the regulatory and tax burdens that might be standing in the way of more attractive products being offered to the public, Bowen said.

“Clearly at the moment people aren’t attracted to them, we need to assess whether it's tax or other regulatory burdens [and if] we are stopping that,” he said.

Bowen also criticised the “tendency” of the industry to divide along “obvious demarcation lines”, which caused the “big picture of what is best for super [to get] lost in what’s best for a segment of super”.

“That’s something that policy makers find frustrating when they are trying to do super as a whole, and not favour one segment over the other, but to just make super better for the public,” he said.

The former chair of the Cooper Review, Jeremy Cooper, also expressed reservation about the quick release of “default super options” such as AMP’s Flexible Super Core product.

“Certainly the new products, [like the] AMP product, look very like MySuper, but they’re not all the way there, they’re not default funds,” he said.

MySuper should set the product benchmark for the rest of the industry, Cooper said.