New research released today by the Financial Services Council (FSC) shows that policy reforms focused on improving how Australians spend their pension savings will boost retirement income by 10% each year by 2050. It is shown to increase by $397 billion by 2020.
New research released today by the Financial Services Council (FSC) shows that policy reforms focused on improving how Australians spend their pension savings will boost retirement income by 10% each year by 2050. It is shown to increase by $397 billion by 2020.
NMG Consulting’s research for FSC provides a roadmap to a more efficient retirement withdrawal phase that will raise consumers’ retirement living standards, reduce bequests and take long-term pressure off the federal budget. Offers.
FSC CEO Blake Briggs said:
“Retirement plans designed to meet the needs of retirees enhance the long-term sustainability of retirement plans by providing them with the products and advice they need when they retire, and by encouraging them to enjoy retirement savings. , will take the pressure off future tax settings.
“FSC research shows that if our roadmap is implemented, annual benefits paid by superannuation as retirement income will increase by 10% each year, increasing by $38 billion annually by 2050. The higher income paid will total $397.1 billion by 2050 when compared to current policy settings.
This roadmap builds on our global approach to retirement and identifies a complete package of reforms centered on action in three areas:
- Help people see and use their retirement pension primarily as a retirement expense, such as making safe financial advice more affordable and changing consumer disclosure rules to focus more on drawdowns. to do.
- Removing regulatory barriers to innovative new retirement income products. This includes facilitating an easy process for consumers to transition from closed legacy products, considering flexibility in prudent capital requirements, and making it easy for consumers to access retirement product features and fees. This includes implementing a disclosure regime that allows for comparability.
- Helping people manage their retirement pensions by simplifying interactions with other parts of the retirement system such as superannuation, aged care and health care.
“Only if governments are committed to helping retirees who, as FSC research shows, are currently drawing 17% less income from their retirement pensions than the best-fit system, will they be able to retire. The Income Code should be the starting point for retirement income policy reform.
“Maximizing retirement living standards and realizing the potential of a superannuation program to increase retiree spending could reduce the burden on the federal budget and result in a 2% structural deficit. This is due to increasing pressure on health and aged care, which can be better funded from personal savings.”
The research also found that:
Approximately 100,000 more people mean an average of $10,000 more in retirement income per person each year.
- By 2060, the amount of superannuation benefits left in bequests each year will be halved by 2060, and superannuation will be used primarily for retirement income.
- Total system assets will fall by 12%, or $1.6 trillion by 2060, leaving 30% of total assets in retirement rather than 40%.
The research report is Download here.
Note: Treasury Department estimates from the Federal Budget October 2022-October 2023 paper continue at 1.8% to 2.0% of GDP in 2023-2026 and 1.9% of GDP in 2032-33. A significant annual budget deficit is projected.
