The FSC has today released research that shows implementing the Quality of Advice Review’s proposals would help an additional two million retirees spend $22.5 billion more and leave $6 billion less in bequests annually by the year 2040.
CEO of the FSC Blake Briggs said: “Despite the benefits of compulsory superannuation, if advice policy settings are left unchanged only a third of retirees will get financial advice over the next decade.
“A generation of retiring Australians would benefit from high quality and affordable financial advice that is fit for purpose, on the topics they want, when they want it.
“The Review’s proposals would help millions of Australians put in place a plan to spend more of their superannuation with confidence and in a way that improves their financial wellbeing throughout their retirement.”
The Quality of Advice reviews reforms would:
- Increase the provision of information, products and advice that is fit for purpose to consumers, particularly those who are unable to afford comprehensive advice (e.g. shift superannuation fund tools, calculators and retirement estimates towards offering consumers more choices).
- Shift the superannuation system’s focus towards making consumers more confident when drawing down their retirement savings, resulting in higher consumption throughout retirement.
- Enable increased retirement specific advice and member engagement by enabling trustees to better guide and engage members through tools that are deterred by current regulation.
As a result of these reforms, NMG Consulting research shows:
- Around 100,000 additional retirees receiving advice each year would more efficiently draw down their superannuation savings (either not consuming too quickly, or drawing down higher amounts with confidence), equating to $10,000 in increased retirement incomes per individual every year on average.
- Two million more retirees (with super savings) obtaining financial advice by 2040 increasing further to 3.4 million by 2060.
- These retirees would collectively draw down $22.5 billion more from their superannuation by 2040, and annual drawdowns would increase further to $42 billion by 2060.
- Annual bequests from retired Australians paid out of the superannuation system would halve from their projected path, down from $53.7 billion currently forecast to $26.8 billion by 2060 under the Review’s proposed framework.
The new modelling follows research revealed last month which showed the implementation of a scaled advice model and other reforms to simplify advice would see a million more Australians with the life insurance they need.
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About the Financial Services Council The Financial Services Council (FSC) has over 100 members representing Australia's retail and wholesale funds management businesses, superannuation funds, life insurers, financial advisory networks and licensed trustee companies. The industry is responsible for investing almost $3 trillion on behalf of more than 15.6 million Australians. The pool of funds under management is larger than Australia’s GDP and the capitalisation of the Australian Securities Exchange and is the fourth largest pool of managed funds in the world.