Limited changes to account-based pension and annuity products have been a driver in retirees holding on to superannuation savings well into retirement, with product providers only jolted into action due to government-enforced measures, a senior wealth manager has claimed.
AMP Wealth Management chief executive Scott Hartley said retirement savings products had been focused on the accumulation period, including lower fees, better returns and more guidance and advice, but as a result had ignored the development of retirement income products.
“These developments are important, there is no doubt about that, but what has happened is there has been little focus on retirement,” Hartley said.
“The industry has basically said advisers can choose from account-based pensions or annuities and they can sort out any problems [for clients], and there has not been enough focus and thinking around innovation.
“The government gave us a nudge last year with the Retirement Income Covenant because people are leaving most of their accumulated superannuation balance when they pass and not having the confidence to use the money they saved to maximise their retirement lifestyle.”
He said while there had been enhancements to account-based pension and annuity products, there was still a lack of innovation and efforts to date had produced one-size-fits-all outcomes.
“We are telling people to take this annuity because that will give you a guaranteed income and retirement, but we know in retirement there are many more levers that people can use,” he said.
Hartley made the comments at the launch of MyNorth Lifetime, a new hybrid retirement income product by AMP that bundles together a retail accumulation superannuation product with an account-based pension that also offers the lifetime cash-flow features of an annuity.
At the launch, AMP stated the superannuation product and deferred income account could be opened before a member moved into retirement phase and then combined with the account-based pension from that time onwards.
While the product was not aimed at SMSF members, AMP retirement solutions general manager Ben Hillier told selfmanagedsuper the company was looking at making the pension components into stand-alone products that could be accessed by SMSF members in pension phase.
