Optimum Pensions support the Federal Government’s moves to implement the Retirement Income Covenant. Our submission to Treasury includes a range of comments designed to help superannuation funds with the practical implementation of these measures.

We see the provision of lifetime incomes from superannuation as a fantastic step to improve the retirement outcomes of all members.  Super funds now have the product flexibility to deliver improved lifestyles in retirement for all Australians.

In our submission our team of experts has included a range of practical suggestions designed to help make it easier for trustees to offer CIPRs.  Our top five tips include:

1. A range of example CIPR designs that trustees can use to deliver on improving retirement outcomes
2. The term – “broadly constant income” be modified to better accommodate lifetime products that have an element of fluctuation.  For example, investment linked pensions allow each individual member to select an investment choice for their lifetime income.  Different members have different preferences when it comes to the trade-off between high income and income variability
3. A suggestion that, in order to achieve scale in aggregate, it will benefit Australia if the longevity risk is managed by a relatively small number of group reinsurers. This will allow funds who choose to retain the assets and offer their own lifetime income streams to confidently get suitable pricing and avoid issues of managing small pool risks
4. Recommendations to assist trustees when engaging members early about their retirement incomes – including rules around future assumptions to use when showing working employees what retirement income they can expect in retirement
5. Highlighting the fact that it’s possible, in line with what other countries do, to facilitate increased pension incomes for people who have sub-standard health – through use of an online underwriting process

As life expectancy continues to increase for Australians, retiring fund members need more efficient products to optimise their standard of living. A lifetime retirement income can give retirees the confidence their income will last for their and their partner’s lives.

This is why we launched the Real Lifetime Pension. Our investment-linked retirement income product has been developed with the objective of giving retirees around 30% higher income for life.

One of the key benefits of the Real Lifetime Pension is its flexibility. It can be established as an immediate and/or deferred income together with the Age Pension, always ensuring a comfortable income for a sufficient account balance at retirement.

We believe this product has the potential to positively change the attitudes of both the consumer and financial planners towards lifetime income stream products – and view them as a vehicle that improves post retirement lifestyles.

Our Real Lifetime Pension product is administered and invested by each superannuation fund themselves, with the longevity risk transferred to an insurer.