Make annuities compulsory, says Deloitte
Deloitte has reiterated calls for “government action” to facilitate access to deferred and lifetime annuities to address sustainability issues with Australia’s retirement income savings.
Deloitte has long expressed concern that superannuation will not provide adequate support in retirement for most Australians unless they work longer or contribute more to their super.
Speaking to SMSF Adviser, Deloitte’s superannuation partner Russell Mason suggested compulsory annuities could work towards addressing longevity risk.
“I’m in favour of compulsion, and that’s what would make it a bit different. It’s a bit like superannuation: if we didn’t have compulsory super, despite all the incentives under the sun, the vast majority of people would not save for retirement,” Mr Mason said.
“The only other alternative is you bring in the age pension as a universal right at a certain age; the government seems to have moved away from that. So deferred annuities would be my way to go.”
Mr Mason said compulsion will encourage competition in the market in the same way that compulsory superannuation saw more competition amongst APRA-regulated funds.
“I think you’d find there’d be new products, new innovations, new players in the market,” he said.