The Senate Inquiry into Retirement System Improvements
This week, the Senate initiated an inquiry aimed at enhancing consumer experiences, choice, and outcomes within Australia's retirement system. The Senate economics references committee will oversee the examination of insurance within the retirement system. Here's what you need to know:
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Purpose and Timeline:
- The inquiry aims to improve consumer experiences and outcomes in Australia's retirement system, particularly focusing on insurance.
- The report is due by 30 June 2024, with the closing date for submissions yet to be determined.
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Chair's Statement:
- Senator Andrew Bragg, the chair of the Senate Economics References committee, highlighted the need to align insurance with Australians' life cycle expectations.
- The inquiry will assess the feasibility of an aged care insurance product to prepare for the projected 70% increase in aged care expenditure over the next 40 years.
- Concerns were raised about a 136% rise in complaints regarding death benefits from super funds in the past year, indicating systemic issues that require attention.
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Scope and Areas of Examination:
- The inquiry will explore policy options to enhance choice and quality of life in the retirement income system, covering aspects like the aged pension, financial advice, home ownership, downsizing, and insurance.
- Key areas of examination include regulatory and tax obstacles to innovation in retirement insurance products, economic impacts of innovation, and the role of fintech in improving retirement outcomes.
- The impact of climate change on insurance premium affordability, asset values, and retirement outcomes will also be scrutinized.
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Government's Initiatives:
- Treasury plans to release a consultation paper addressing issues with financial advice and retirement products accessibility.
- Concerns were raised about retirees' reluctance to spend their super, with calls for more diverse and flexible retirement products to match individuals' needs and circumstances.
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Industry Perspectives:
- The Financial Services Council (FSC) supports government efforts to ensure retirees have access to a range of products consistent with superannuation's promise of providing income for a dignified retirement.
- The FSC emphasizes the importance of removing regulatory barriers inconsistent with the retirement income covenant to optimize retirement outcomes for members.
The inquiry aims to reflect a commitment to enhancing the retirement landscape for Australians, addressing systemic issues, and ensuring retirees have access to suitable products and support for a secure financial future.