Chartered Accountants Australia and New Zealand and CPA Australia welcome the opportunity to provide comments on the Retirement Phase of Superannuation Discussion Paper.

We are generally of the view that the provision of retirement benefits is a problem for APRA regulated superannuation funds. Self Managed Superannuation Funds appear to provide a service that meets retirees’ needs, and we do not believe that there is presently any need for SMSFs to be subject to the retirement income covenant.

Whilst we think lifetime annuities and pensions are very useful products, we do not think they will have widespread appeal in Australia unless the government offers greater levels of financial assistance. Additionally, we believe that unless product design will consider lump sum withdrawals for large expenses late in retirement such as aged care, as well as consumer protection features such as portability, the uptake of these products will be limited, creating a future scrapheap of legacy products.

We do not support any plans to limit lump sum withdrawals. Large, unexpected, expenses are a normal part of retirement.

Finally, we have suggested a series of policy proposals to improve the retirement phase of superannuation:

• Inclusion of retiree representatives on the boards of equal representation trustee boards
• Wholesale simplification of the retirement income system regulatory environment to ensure inconsistencies and complexities are removed
• Possible adjustment of the minimum income withdrawal rules
• Providing significant additional assistance to retirees if the government would prefer a retirement income product different to account based pensions to be the market preferred default product

While we consider additional guidance, education and communication for retirees and prospective retirees is welcome, we believe these are only partial solutions.

We do think APRA regulated superannuation funds could do much more to assist those nearing retirement and existing retirees. We believe any draw-down offerings different to government selected defaults should only be offered after a person has received personal advice from a financial adviser.

We do not support the idea of government funded free and impartial guidance for retirees in or approaching retirement similar to the United Kingdom’s PensionWise service.