If the launch of AMP’s new retirement income product is any indication of the landscape of the Retirement Income Covenant regime, it’s that advisers are going to provide value in the decumulation environment.
At a briefing at AMP headquarters on Tuesday morning, the organisation launched the MyNorth Lifetime range of products which is designed to combine the features of an account-based pension with a lifetime annuity.
The wealth manager partnered with life insurer TAL, who are underwriting the life income stream which can be commenced before retirement.
AMP director of platforms Edwina Maloney said advice will play essential part in how the product is utilised.
“Retirement is a complex environment,” Maloney said. “That’s why it’s important that clients get advice at that crucial point in their life. It’s a complex regulatory environment, there’s social security benefits, asset tests, income tests – it’s complex.”
The wealth manager will be running masterclass sessions for advisers on the intricacies of the product.
Maloney added the products were deliberately designed to be advised because advisers are in the best position to adjust the product to the needs of the client.
“There are other products out there in the market for direct members and that’s something we’ll continue to explore in terms of our pipeline, but North is an advised product.”
AMP Australia chief executive Scott Hartley said the covenant was a ‘nudge’ from the government.
“I’d say it was a nudge because there was nothing prescriptive necessarily in that,” Hartley said. “But it was right they gave a nudge because people are leaving most of their accumulated superannuation balance when then they pass.”
AMP CEO Alexis George said the product is not at all simple and is meant to be an advised solution.
“Most of us are well aware of the fact that most Australians don’t spend their superannuation in retirement. In fact, about 90 per cent of superannuation is passed on,” George said.
Regulatory flexibility
AMP stated the product increases the likely eligibility for the Age Pension with at least a 40 per cent discount on Centrelink assets test.
Maloney said while the only certainty is uncertainty in the regulatory environment, there is no precedent for a retrospective change to Centrelink benefits that would affect the product.
“Historically there has never been a chance that has been applied retrospectively as it relates to Centrelink benefits,” Maloney said.
“We go out with confidence that clients taking up this product have a high degree of confidence there won’t be a retrospective change to legislation.”
AMP retirement solutions general manager Ben Hillier added the same precedent applies to any lifetime stream.
“There’s never been a retrospective change to lifetime income streams,” Hillier said. “The government and Treasury have made that clear to us… they would not make any retrospective changes.”
