UK and Australia have similar challenges in retirement income
Australia is often heralded as a model pension system, but a paper from the Actuaries Institute highlights there is still a long way to go.? And the problems (and solutions) bear considerable resemblance to the UK.?
Philip Hodges talked with Stephen Huppert , co-author of Retirement Matters which reimagines the retirement ecosystem so people can easily access targeted support to plan their futures and fund their lifestyles by having greater work flexibility and access to equity in their homes.
Here is Philip's conclusions on the similar challenges and solutions between the two countries highlighted from each report chapter...
THE CONCEPT OF RETIREMENT
Everyone is looking for help about their retirement.??
People are not searching for education, guidance, advice or products…they just want Help
RETIREMENT RISKS AND CHALLENGES
Everyone is faced with the same problems
Whilst the Australian system does a great job ensuring savers build a decent retirement pot, they face the same risks in decumulation as UK savers.? In 2022 in Australia it became mandatory for trustees to support savers in addressing these risks - something they are still grappling with.? In the next two years we will see similar obligations for trustees in the UK.
FROM RETIREMENT SAVING TO RETIREMENT FUNDING
The retirement system is unaffordable
Despite Australia being ahead of the UK by decades for pension savings, the state pension and the tax concessions can not continue in their present format.? As in the UK there is a need to look at retirement more holistically such as work options post full-time work and accessing income from equity in the family home (or other property).
RETIREMENT PLANNING: THE NEED FOR HELP, GUIDANCE AND ADVICE
Navigating the path to and through retirement is complex
In Australia just 37% of non-retirees feel prepared for retirement.? In 2022 the government carried out their equivalent of the Advice/Guidance Boundary review but it’s a long and difficult path.? A clear government position is still outstanding and any firm policies will then be subject to consultation.
Andrew Gale and Stephen Huppert have produced a brilliant paper to highlight the major issues in Australia which are precisely the same in the UK.? Whilst there are clear messages for the government, the big take-away is that the industry can’t wait for the state to solve these problems - many of the solutions to help savers secure their best retirement are possible today.