SMC welcomes retirement Best Practice Principles, but retirement system needs to be made simpler

The Super Members Council welcomes the release of the Government’s Best Practice Principles for Superannuation Retirement Income Solutions and new Retirement Reporting Framework, but more needs to be done to deliver a simpler, stronger retirement for millions of everyday Australians.

With more than two million Australians expected to retire over the next decade, it is essential the system now places the same focus on supporting Australians to turn those savings into secure retirement incomes.

The Best Practice Principles give helpful guidance to trustees on designing and delivering retirement income solutions that better reflect members’ needs, circumstances and preferences.

The introduction of the Retirement Reporting Framework will improve transparency and accountability in the retirement phase.

While these measures are a positive step forward, there is more work to do to ensure the retirement system is simpler, fairer and works in the real world for everyday Australians.

Millions of Australians approaching retirement are faced with a maze of complex decisions – figuring out how much super they will need, Age Pension eligibility, investment returns, and drawdown rules — often without the advice or guidance needed to make the best choices.

The Council’s modelling shows a typical new retiree with super could miss out on as much as $136,000 (or $6,500 a year) over the course of their retirement due to the daunting complexity of Australia’s retirement system

The modelling highlights with fresh urgency the need to fast-track long-awaited financial advice reforms – and design simpler pathways into retirement that are much easier for everyday Australians to navigate.

Simplifying the advice and guidance framework would help ensure Australians can get timely, trusted help to understand their options, make informed decisions, and choose a retirement income solution that suits their needs — without unnecessary cost or complexity.

“With the coming silver tsunami of more than two million Australians racing towards retirement, we need to make that shift easier and more intuitive,” says the Council’s CEO Misha Schubert.

“A simpler transition into retirement would mean more people can retire with confidence they’re not missing out on money to pay for the things they need.”