The Turnbull Government has today released a discussion paper exploring key policy issues to facilitate further development of a framework for the retirement phase of the superannuation system.
The discussion paper is part of the Government’s response to the Financial System Inquiry (the Murray Inquiry). Through this process the Government invites feedback from consumer groups, the superannuation industry and other interested stakeholders on the proposed framework for facilitating trustees to offer what the Murray Inquiry labelled, ‘Comprehensive Income Products for Retirement’ or ‘CIPRs’.
As part of its consultation, the Government is proposing to rename CIPRs ‘MyRetirement products’ as a more consumer-friendly and meaningful name.
Last year’s Intergenerational Report projected that by 2054-2055 the number of Australians aged 65 and over will more than double, while one in every 1,000 people will be aged over 100.
“As Australians enjoy longer and healthier lives and the superannuation system matures, it is important we get the settings for our superannuation system right,” the Minister for Revenue and Financial Services, the Hon Kelly O’Dwyer MP said.
“This is an important reform that will help lift the living standards and choices of older Australians. There are seldom other reforms that offer such large potential increases in income, without a cost to taxpayers.”
The potential gains to retirees, the economy and taxpayers from the introduction of MyRetirement products are significant. For retirees, the Murray Inquiry noted that incomes from more innovative retirement income products could be 15 to 30 per cent higher than those from the current typical strategy of drawing the minimum amount from an account-based pension. MyRetirement products would also provide security of income for life – often at a time people feel most vulnerable.
The Government will facilitate trustees offering MyRetirement products to provide an anchor to help guide individuals in their retirement income decision-making. Importantly, individuals won’t be forced to take up these products. They will simply have a broader range of choices in how they want to support themselves in their retirement.
This builds on the Government’s superannuation reform package, which removes tax barriers to the development of new innovative retirement income stream products.
The development of MyRetirement products is another important step to improve the efficiency of the superannuation system to better meet its objective of providing income in retirement to substitute or supplement the Age Pension and to provide individuals with meaningful choice.
The discussion paper is available on the Treasury Consultation Hub. Written submissions are due by 28 April 2017.