Chief executive of HESTA, Anne-Marie Corboy, says industry has not looked appropriately at adequacy in the accumulation phase when considering the post-retirement landscape.
Speaking at a CMSF session on adequacy and “getting to the finish line”, Corboy was critical of the view that it’s all “done and dusted” and the focus should now simply be appropriate retirement products.
“The fact is that for the majority of Australians their account balances when they enter retirement won’t buy very much because they’re not that large. And I think sometimes we forget that. We forget that because we work with the financial services industry, we’re not representative of the majority of Australians,” she told delegates.
Corboy argued that statistics from various industry bodies and averages based on Treasury modeling don’t give an accurate picture of median and average balances.
“If you look at the majority of Australians that any of the funds who come to this conference represent, then their account balances are still quite low,” she said.
According to Corboy, the average balance is $71,000. For men in the age range of 60 to 65, the average is $102,000 and for women, the figure is $88,000.
“For our members at HESTA – and over 80 per cent of our members are women – the average is about $24,000, and the median for women is just over $10,000. So, half of our 750,000 members have $10,000 or less in their accounts.”
Corboy says that while balances will be larger by the age of retirement, they’re still not “huge”.
“If you read the financial press at the moment and hear some commentary that’s coming out of the industry, you would think that everyone is retiring with at least $500,000, and obviously most of them have got a million dollars, because we’ve got this hysteria [about tax arrangements].”
According to Corboy, the industry needs “to come back to reality for what the majority of Australians are experiencing”, and consider measures still in the accumulation phase.
She advocates a policy approach to post-retirement products, which should be appropriate across the population.
“But at the minute we are talking about people with high account balances and high income earners and they don’t represent the majority.”
|Day 2 newsletter from CMSF 2013|
|Day 1 newsletter from CMSF 2013|