The shadow minister for financial services, Clare O’Neil, has added her voice to the growing chorus of industry insiders calling for a greater focus on the nation’s post-retirement system, instead of on the accumulation phase. She said there was now a groundswell of support for more work to be done.
Appearing at the Investment Magazine Chair Forum, in Victoria on Wednesday, O’Neil said there was a “growing drum beat for change” on the back of the heated public discussions sparked by the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry and the Productivity Commission’s report on superannuation.
Ensuring that older Australians get the right longevity products and quality financial advice was of paramount importance, she added.
“Anecdotally, I hear that this is a problem for many Australians,” O’Neil said. “When they decide they want to retire, people sometimes swoop in and try to sell them things that might not be in their best interest. So, there is work to be done there.”
O’Neil told her audience that when she became shadow minister for financial services, she had a “blast of meetings” with a number of people, yet few addressed the retirement phase.
“The big industry focus is on the accumulation phase, the superannuation guarantee and the default system, and it is staggering to me how little conversation there is about what happens when people turn 65 and have access to that money,” she said. “So, we’ve talked about the need to look at products that will allow people to manage their longevity risk better.”
Other voices calling for action
O’Neil’s comments came after KPMG wealth chief and former union boss Paul Howes recently called for more attention to be given to the decumulation phase.
“When we think about the proper purposes of super, that’s still the challenge that hasn’t been resolved,” he earlier told Investment Magazine.
This month, the Productivity Commission’s final report into the $2.7 trillion superannuation sector recommended an independent inquiry into the broader role of super in funding retirement incomes.
The PC also backed a move by Assistant Treasurer Stuart Robert to delay the implementation of comprehensive income products for retirement (CIPRs) by two years.
Robert, who also appeared at the Investment Magazine Chair Forum on Wednesday, said the government was considering the PC’s recommendations.
“[The government] will respond after receiving the royal commission’s final report, which will also address superannuation,” he said in an address that was focused on the various issues plaguing the accumulation system.
But there was no mention of the post-retirement phase in his prepared speech.
“While elements of Australia’s superannuation system are world-class, the government wants to strengthen those areas that are not delivering the best outcomes for Australians in retirement,” Robert told the conference.
Later in the day, O’Neil conceded that a system that compels workers to save for the future but denies them freedom to spend their retirement savings the way they want strikes her as problematic.
“The guiding principle for me is that it is the members’ money, so I struggle with ideas to limit the way we might ask them to spend it,” she said.
Asked what a Labor government would do to ensure certainty of income in retirement, she said longevity risk remained a big issue, as not everyone would retire on super alone – some would be part or full pensioners.
“The way we protect people who don’t have private wealth is to have a good pension system and, in particular, a public health system and aged-care system that work properly,” O’Neil said.