ASFA CONFERENCE 2003
Meeting retirement needs: Decumulating with confidence
Achieving a good retirement requires careful planning, but planning is complex in the face of uncertainty—and retirement planning has more than its fair share: from deciding when to leave full-time work to wondering what our future lifespan will be and whether we will have enough funds to last the distance.
Peter Rowe participated in a panel discussion at the recent ASFA Annual Conference on ”Meeting retirement needs: Decumulating with confidence”. Moderating the panel was Nick Callil, Head of Retirement Solutions at WTW Australia. Joining Peter were Robbie Campo, CEO at ESSSuper, Meher Edibam, Director, Institutional Client Solutions at Challenger and Simon Aboud, Chief Product Officer at Allianz Retire+.
Peter explained that it is important to change the members’ expectations and talk to them about generating an income in retirement to replace their regular salary or wage. A simple initiative is to show projected retirement income per annum on member statements alongside the lump sum value.
To illustrate the limitation of the account-based pension, the most common retirement product offered by superannuation funds, Peter talked about his parents who lived for 40 years after retirement on a government lifetime pension. An account-based pension is likely to have only lasted half that number of years!
Peter also pointed out that financial advice and guidance are needed as the system is complex. And that advice or guidance must take the whole family into account.
He said that a combination of an account-based pension and a lifetime product is most likely the best possible answer. Financial advisers need to help determine the balance between the two products. “There aren’t enough planners in Australia to look after the number of people retiring in the next 5-10 years well.”
For financial planners ready tomove towards proactive, longevity-focused retirement planning, Peter recommends the newly released Optimum Pensions book, “Retirement Income for Life – Solving the Longevity Equation” as an essential guide for a secure retirement income for life.