Challenger Limited supports the Financial System Inquiry’s (FSI) recommendation for a pre-selected income product in retirement and calls for product choice and longevity protection to meet the differing needs of retirees.
Challenger Chief Executive Officer Mr Brian Benari said: “Achieving the primary objective of the superannuation system requires changing the focus from accumulating funds to delivering retirement incomes and a comprehensive income product for retirement (CIPR) is an important step.
“The proposed pre-selection or opt-in model is consistent with other choice features of the superannuation system but, as the FSI Report recognised, that choice needs to include a product that protects retirees from outliving their savings. To improve the retirement framework it’s absolutely critical to protect against longevity risk. Anything less is just the status quo.”
In its submission on the FSI’s Final Report, Challenger emphasises that CIPRs need to meet individuals’ needs as far as they are identifiable and foreseeable and can be catered for with a practical and efficient product.
It suggests that superannuation funds offer members a number of CIPRs, not necessarily a best fit solution for all members, though all CIPRs should include consideration of risks including longevity protection.
Challenger’s submission says that the size of superannuation assets, eligibility for the Age Pension and, age at retirement are among the factors influencing an individual’s needs from a CIPR.
It emphasises that in providing guaranteed income that protects against longevity risk, annuities have an important role to play within CIPRs.
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