Challenger argued that the post-retirement market has remained underdeveloped, despite a superannuation system that has reached a “critical mass”.
Pointing to the lack of a “retirement-specific governance framework”, Challenger chairman Jeremy Cooper commented in the statement: “Our super system is more mature than most people realise.
“It’s doing the first part of its job, allowing people to accumulate assets through their working lives, with typical household super wealth at retirement in the $350,000-$500,000 range and increasing.
“This wealth was accumulated to provide income in retirement, but the system is not yet set up to do this next phase successfully,” Mr Cooper said.
Challenger’s submission to Treasury backs the implementation of a covenant, which sees the instillation of legislation “for the retirement phase of super keep pace with the size and importance of the system”, ahead of other aspects of the retirement income framework.
The submission also argues to Treasury that super funds’ establishment of a retirement income strategy would benefit older super fund members and address a gap in the Superannuation Industry (Supervision) Act.
“The CIPR reform process offers significant opportunities to achieve improved outcomes for Australian retirees, in particular: higher incomes and therefore improved living standards; assurance through longevity pooling and better risk management that they can enjoy the benefits of these higher incomes without having to worry whether their retirement savings will last as long as they do; and sufficient financial flexibility to meet emerging financial needs; while maintaining Australia’s existing retirement incomes choice regime,” the submission said.
Mr Cooper added in the statement that the CIPR proposal may not be a “revolutionary change” but was nonetheless a “necessary enhancement” for a system heading towards $1.3 trillion in retirement by 2030.
