Justine Marquet (left), Ian Fryer, Melody Edwards and Jayson Dominelli

A Your Future Your Super-style test for retirement income products would be “an utter disaster”, a leading superannuation fund researcher has warned.

Chant West general manager Ian Fryer told the Professional Planner Researcher Forum in Sydney on Tuesday that retirement income solutions need to deliver confidence to members that they will have enough money to last their expected lifetimes, but there are many ways longevity protection can be delivered.

Fryer said it would be difficult to create a YFYS-style benchmark for allocated pension products and virtually impossible for products with longevity protection.

“If we use the same thing in retirement, it would be an utter disaster. A majority of products, account-based pension products, would fail and I’ve got no idea what you do with longevity products,” Fryer said.

“Our recommendation… for the performance test is moving towards some sort of risk-adjusted return basis. And [even] if there’s something like that [which] could work for account-based pensions, it still wouldn’t work for longevity products. They need to be kept out.”

A discussion paper released by Treasury on Monday outlined potential new policies aimed at helping fund members navigate retirement income options, supporting super funds to deliver better retirement income strategies, and improving access to lifetime income (longevity) products.

The paper listed the YourSuper comparison tool and the performance test as two effective ways in the accumulation phase to rule out underperforming products and funds, which could help members make more informed choices.

Fryer told the forum that comparing super funds in accumulation is much simpler than comparing retirement products, especially those that incorporate longevity protection.

Accumulation funds can be compared on costs, returns, insurance offers and the like; but comparing retirement income options with longevity protection built-in is like comparing “apples with pears with hamburgers”.

“Which is better? Well, it depends what you want,” Fryer said.

“Do you want an apple? Or do you want a hamburger? It actually makes comparison tricky. And the reason why it’s tricky is there’s all these variations.”

Fryer said some products will be advised while others won’t. Additionally, some might be based on a single or a couple of investment strategies.

“Some will be a whole menu, and there’s longevity over the top of that; some will be guaranteed [and] some will be market-linked, so they’re all trying to do different things,” West said.

“I don’t think ever at Chant West we’ll be able to come out and say, necessarily, this product is better than all the other longevity products, because they’re trying to do different things.”