The Retirement Income Covenant (RIC) and the proposed introduction of a new class of advisers that can provide basic advice are among the measures that Natixis Investment Managers’ annual Global Retirement Index report has highlighted as a “global opportunity for learning and adaptation”.
The Natixis IM report, created with CoreData, assesses factors that drive retirement security across 44 countries. This is measured using 18 performance indicators across four thematic subindices: health, finances in retirement, quality of life, and material wellbeing.
It revealed that Australia has ranked seventh for the second year in a row, with the same overall score (78 per cent) as 2023, though down from fifth place in 2022.
Switzerland took the top position with a score of 82 per cent, followed by Norway (81 per cent), Iceland (81 per cent), Ireland (80 per cent), the Netherlands (79 per cent), and Luxembourg (78 per cent).
Despite Australia’s strong performance in the retirement space, Natixis recognised that many Australians are still feeling financial strain in retirement.
It found that 62 per cent of Australians aged 70 and over do not have any superannuation at all and another 47 per cent said it will “take a miracle” for them to securely retire.
Moreover, 40 per cent of retirees are underspending their retirement savings due to the fear of running out and longevity risk, underscoring the importance of financial advice during this stage of life.
“Despite the strengths of our retirement system, many Australians find managing their retirement to be a daunting task, and that’s likely due to the limited access to financial advice,” said Louise Watson, country head for Australia and New Zealand at Natixis.
“Some Australians have access to a financial adviser but not all; if we are to close the retirement savings gap, advice needs to be affordable and easily accessible to all Australians.”
While Natixis IM acknowledged these concerns, noting that “the advice gap remains a significant challenge in Australia” and the RIC’s goal of improving super fund members’ retirement journey has been hampered by challenges in promoting the uptake of lifetime income products, the report was bullish on the ability of reforms to positively influence retirement outcomes.
The introduction of “qualified advisers”, it said, would “address the industry’s talent shortage by creating new entry pathways and fostering future professionals through structured career progression”.
“This will ensure there are enough skilled advisers to provide comprehensive financial guidance to the growing population of pre- and post-retirees, better meeting the financial needs of Australians,” Natixis IM said.
The report added: “Australia’s retirement system has long been admired for its success in building retirement savings and is seen as a model for other nations to emulate.
“As the country and wider developed world confront the complexities of an ageing population and the challenges of smart decumulation, Australia’s reform initiatives could potentially serve as a global benchmark for retirement policy.
“Furthermore, the push for enhanced financial literacy and equitable retirement solutions present a global opportunity for learning and adaptation. As Australia charts its course through these challenges, it will provide valuable insights and potentially shape a template for retirement security worldwide.”
What nonsense. Our industry hasnt seen any helpful reforms in more than a decade.
I haven’t seen a call for legal services to be ‘affordable’