The role of super funds in providing financial advice to create retirement incomes for their members has been not been properly addressed, leaving retirees without access to inexpensive advice, according to a retirement incomes services provider.
SuperEd and Retirement Essentials executive chairman Jeremy Duffield said the 2020 Retirement Income Review did not address the place of financial advice from superannuation funds and instead pointed to the next review of financial advice set for 2022.
Speaking at the Household Capital Three Pillars Forum today, Duffield said the failure to address advice was “the elephant in the room” when talking about retirement income.
“That really is the big question: how are super funds going to provide retirement advice? The current regulations make it very difficult to know what the boundaries are and to provide an affordable form of advice in a safe harbour environment for super funds,” he said during a panel session at the forum.
The lack of knowledge of retirees and the dearth of advice was leading to negative outcomes, he said.
He noted 30 per cent of SuperEd’s age pension clients were still in accumulation phase and not in an account-based pension, while another 30 per cent had given up their super fund and moved entirely to cash.
Australia’s compulsory superannuation system had forced people to save, but had not shown them how to use those funds when they were no longer working, he said.
“We have asked people to save all their life through the accumulation phase of superannuation, but now we’re expecting them to draw down their super so that they can fund a retirement lifestyle that’s suitable, but we have not given them the tools they need to do that,” he said.
“It’s a very complex challenge to actually work out how much you can sustainably spend. We’re not consistently giving them retirement income forecasts they can use to guide them as they go.
“There’s a lot more we can do regarding providing tools to retirees, recognising that only roughly 15 per cent of Australians are getting advice from a financial professional.”