Australia’s taxation system.  

Part of that wide-ranging view will examine whether Australians are ex­posed to too much market risk in their retirement savings strategies, particu­larly as they approach the decumulation phase. Annuities have been flagged by Henry himself as a potential remedy for this. As the obligor for roughly 40 per cent of

Australia’s annuities market (65,000 policyholders), Challenger has penned a submission to the review, arguing that this style of income stream should comprise 30 per cent of a re­tiree’s asset allocation.

In addition to reducing the amount of “equity market timing” engaged in by retirees, the submission argues lifetime annuities would reduce “leakage” from the system because any assets left over by a deceased policyholder could be re­tained and used toward the retirement income of others in the pool. Given the psychological barriers, Howes suggested the purchase of life­time annuities should either be heavily tax-incentivised or made compulsory, and that the private sector be left to provide the products. “You could argue the Government already has its hands full running the lifetime annuity known as the age pension,” he said, adding that the pricing and terms of annuities would become far more favourable to consum­ers as a result of the scale created by compulsion.