The pensions and annuities markets in the United States are more innovative than those in Australia, according to a report used as part the Investment and Financial Services Association's (IFSA) submission to the Henry review.

The Milliman Report - International trends in the provision of retirement income solutions, compared the use of different retirement products and strategies in the international market to what is currently being used in Australia and found the US market was particularly innovative.

"That market encourages a wide range of products and is quite competitive, which works generally to the consumer's benefit," Milliman practice leader Wade Matterson said.

The report also revealed the United Kingdom has a strong emphasis on annuitisation.

"This was the only market with a strong movement towards annuities, but I doubt very much it would be that way without the compulsion," Matterson said.

Matterson said Australia currently had two options but they were at the extreme end of the scale.

"Australians can either have an allocated pension that passes the risk on to the investor or a lifetime annuity, which might protect against market downturns but means less flexibility," he said.

"I think we will see a lot more products going forward that provide more middle ground."

This week ING Australia launched MoneyForLife Funds, which is reportedly Australia's first pension guaranteed retirement income product.

Matterson called on the government to create better policy that incentivises the need to have an income stream rather than a lump sum.

"There is a lot of debate around the government's role in the pension system and there is no silver bullet, but a different combination of products would be the best thing for Australia," Matterson said.