The vessel that is the Henry Tax Review continues to spring leaks. The latest was a wide-ranging article in The Sydney Morning Herald last weekend that outlined a number of Henry initiatives.
One that caught the industry's attention has been the government's plans surrounding longevity risk and the proposal for retirees to swap super payments for a government guaranteed lifetime income stream.
Australian Institute of Superannuation Trustees (AIST) chief executive Fiona Reynolds welcomed the plan and said new policy measures were needed to tackle the growing problem of Australians outliving their retirement savings.
"With improvements to life expectancy it is clear that a significant proportion of retirees, particularly women, will exhaust any super and be totally reliant on the age pension for income in their final years," Reynolds said.
Recent research by GESB, Western Australia's largest super provider, has shown that only one in four Australians expect to retire before they are 60 years of age.
GESB head of wealth management Fabian Ross said preparation for retirement is essential.
"For the majority, building adequate retirement savings by the age of 65 continues to be a very demanding proposition and the dramatic rise in life expectancies during the past century has only increased this challenge," he said.
So with this in mind, the industry is positive about the government's longevity risk proposals.
"The ability to exchange super payments for a government-provided guaranteed lifetime income could open a valued and flexible option for retirees, particularly those with small super balances and limited assets," Reynolds said.
The Association of Superannuation Funds of Australia (ASFA) chief executive Pauline Vamos agreed and said while there were already products on the market that met longevity risk, they were not necessarily popular because of the cost involved.
"We have to look at a way for the private market to provide these products and to make sure that the cost of capital is reduced," she said.
Vamos suggested the best option for funding long-term capital guaranteed products was an investment in infrastructure.
"The government needs money for Australian infrastructure, the economy needs better infrastructure for growth, and superannuation funds have money to invest in it," Vamos said.
However, the super industry bodies remain unimpressed at Henry's seeming reluctance to raise the superannuation guarantee from 9 per cent to 12 per cent.
"Research consistently shows that 9 per cent compulsory super over a working lifetime is still not enough for most Australians to enjoy a financially comfortable retirement," Reynolds said.
Vamos was hopeful and said this did not mean the government was not interested in an increase at some point.
"(Minister for Superannuation) Chris Bowen particularly is aware that people want more than an adequate retirement," she said.
"However, we are disappointed because we believe this is short sighted and the government can't say on one day that we've got an ageing population and we've all got to save for our retirement and then not have clear incentives for people to do so."
For the moment, despite all the speculation, Henry remains under wraps but it does seem that a clearer picture is forming, particularly in regards to Henry's views on longevity risk.
