Consultation on the retirement phase of superannuation

The Albanese Government is looking at how to improve the retirement phase of superannuation so that the system delivers a better retirement for more Australians.

A discussion paper released today seeks community and industry views on how the superannuation system can best provide the security and income Australians need as they live longer and healthier lives in retirement.

While there is recognition of super’s importance in building nest egg savings, there has been less attention on optimising its role in retirement. There’s a clear need for better information, support and well-rounded income products to help retirees make the most of their super.

We want to ensure super delivers on its foundational promise of providing a dignified retirement for more Australians.

The welcome and important focus on the accumulation phase of super needs to be matched by a similar focus on the retirement phase.

The discussion paper released today seeks to enable this by examining three key areas:

• Supporting members to navigate the retirement income system,
• Supporting funds to deliver better retirement income products and services, and
• Making lifetime income products more accessible.

More Australians are looking to their super to play a greater role in providing for their retirement. Over the next 10 years, the number of retirees with a super account will more than double, with an estimated 2.5 million Australians set to retire.

With Australians increasingly living longer, healthier lives, many retirees are naturally concerned about outliving their savings.

The problem is most retirees do not have access to the appropriate products to help them maximise their super over their lifetime.

In fact, 84 per cent of retirement savings are held in account-based or allocated pensions, with only 3.5 per cent held in annuities. Unlike account-based pensions, annuities offer the option of receiving regular payments for life, regardless of how long a person lives.

Super funds need to do more to understand their members’ retirement needs and provide products and services tailored for their retirement. We also recognise there is a role for government and regulators in creating an environment that supports these changes.

The discussion paper is available on the Treasury website. Submissions are open until 9 February 2024.