IPA welcomes review into retirement income sector
The Institute of Public Accountants has commended the government’s announced review into the retirement income system.
Treasurer Josh Frydenberg has announced that he will commission a review into the retirement income system, which will include the interfaces of superannuation, government pensions and taxation.
The IPA applauded the Treasurer's efforts, but admitted that such a review is long overdue.
"The importance of trying to define what a retirement living standard the system should aim for is not well defined," said IPA chief executive Andrew Conway.
Mr Conway warned that there is a budgetary consideration of funding the age pension and superannuation tax concessions and ensuring that the system is sustainable going forward.
“The need to encourage greater investment in superannuation to facilitate self-funded retirement is critical as Australia will not be able to fund government pensions in the future, especially considering our ageing population,” Mr Conway said.
“Different mechanisms need to be considered given the longevity risk when superannuation members retire. This includes the development of annuity type products.”
However, he cautioned, all complexities in the system, which exist due to many competing interests, must be given due weight if “we are to develop an equitable retirement income system”.
“For instance, we cannot ignore the findings of the Productivity Commission report, which suggested reforms to benefit members through lower fees and higher investment returns could generate an extra $533,000 for a new job entrant today when they eventually retire,” said Mr Conway.
“An essential element of this review will be to provide access to affordable financial advice, which is what public accountants, as trusted advisers, can deliver.”